Toshiba has been trying to flog off its flash memory unit to cover losses from its bankrupt US nuclear business Westinghouse, but any deal it managed to set up was scuppered by Western Digital, which is Tosh's partner in the business.

A group including Western Digital, US private equity firm KKR  and Japanese government investors are offering around $17.3 billion for the unit. The group and Toshiba aim to announce a deal by August 31 when Toshiba’s board meets.

Some senior Toshiba executives had initially balked at Western Digital’s offer, because they wanted $18 billion and were worried about government objections to a sale to a non-Japanese company. But sources said the US firm took a conciliatory tack and decided not to seek a management role in the new business and limit its stake to no more than one-third even when it converts the bonds to equity.

Toshiba and Western Digital are the world’s second and third largest producer of NAND chips.