Toshiba and SanDisk have entered into a new provisional deal that will see Toshiba partially buying out SanDisk’s stake in two flash memory production facilities in Japan. The facilities, located in Yokkaichi, Japan, are currently a 50-50 split between SanDisk and Toshiba; under the new arrangement, Toshiba will own 30 percent of the plants’ production right off the top, with the remaining 70 percent of the factories’ output still being split evenly between the two companies, effectively changing the split from 50-50 to 65-35 in favor of Toshiba.
Financial terms of the arrangement were not disclosed. The companies hope to iron out the details of the arrangement and have everything set in stone by the first quarter of 2009.
The agreement is interesting in the context of Samsung’s ongoing interest in acquiring SanDisk; last month, SanDisk rejected a $5.8 billion buyout offer from the South Korean electronics giant. Samsung is the world’s largest manufacturer of flash memory; if it were to acquire SanDisk, Toshiba would find itself with comparatively few places to turn for flash memory, so getting itself a guaranteed share of the output from its joint venture with SanDisk makes sense. For its part, SanDisk has said only that the deal will reduce their capital spending and strengthen their financial position.
