Toshiba's board of directors has chosen a consortium of Japanese government investors, U.S. Bain Capital and South Korea's SK hyinx as the preferred bidder for its memory chip business, aiming to seal a deal worth some $18 billion by next week.

"Toshiba has determined that the consortium has presented the best proposal, not only in terms of valuation but also in respect to certainty of closing, retention of employees and maintenance of sensitive technology within Japan," the Japanese company said.

The consortium also includes funding provided by Japanese government funds Innovation Network Corporation of Japan and Development Bank of Japan Inc.

The consortium is estimated to have secured cash worth 2 trillion yen (US$17 billion). That appeared to be somewhat less than a 2.2 trillion yen offer from a rival bidder, Broadcom and its partner U.S. private equity firm Silver Lake.

Taking anti-monopoly regulations into consideration, SK hynix is expected to join the consortium by offering loans, instead of directly chipping in money.

Following this decision, Toshiba's intention is to reach a definitive agreement with the consortium by the date of its annual ordinary general meeting of shareholders, scheduled for June 28, and to close the transaction within March 2018, upon clearance of all the required processes, including competition law approvals in key jurisdictions.

However, prospects for an early resolution to the sale of the world's No. 2 producer of NAND flash chips remain unclear as Western Digital, its chips business partner that has launched legal action to prevent a deal without its consent, was not part of the winning group.

"Toshiba continues to ignore both SanDisk's consent rights and the dual-track legal process currently underway. The language of the relevant agreements is clear: Toshiba Corporation has no right to transfer its JV interests to a third party without SanDisk's consent. SanDisk has not given its consent to any transaction, and will continue to protect its JV interests and preserve its rights through both its request for injunctive relief and the arbitration process," Western Digital said. "We note that Toshiba has acknowledged and validated SanDisk's consent rights on multiple occasions. Furthermore, certain parties identified in Toshiba's announcement have previously been notified by Western Digital that it considers any effort to aid Toshiba's breach of its contractual obligations to SanDisk, including any agreement to directly or indirectly transfer any portion of the joint venture, as tortious interference with contract."

On June 15, 2017, Western Digital's SanDisk subsidiaries filed a request for injunctive relief seeking to prevent Toshiba Corporation from transferring its JV interests until the request of the subsidiaries for injunctive relief in arbitration is decided by the arbitral tribunal. The arbitration filed on May 14, 2017, with the ICC International Court of Arbitration continues to move forward in parallel.

"We remain confident in our consent rights and our legal position and look forward to the hearing for injunctive relief, which is scheduled for July 14, 20177," WD added.

Foxconn also bid, through a consortium that included Apple and Dell Inc.