* Board hopes to vote on new Western Digital plan next week-source
* Western Digital offering to drop out of bid but with conditions
* Toshiba shares end up nearly 5 pct (Recasts with end of board meeting, source information)
By Makiko Yamazaki
TOKYO, Sept 6 (Reuters) - Toshiba Corp's board, under pressure to clinch a deal for its prized memory chip unit soon, met on Wednesday to review a revised bid proposed by Western Digital Corp but no agreement was reached, people familiar with matter said.
The latest twist in a tortuous series of revised bids and changing alliances among suitors has seen Western Digital - which has been at loggerheads with Toshiba - offering to drop out of the bid it is organising if that will help get a deal done and other conditions are met, separate sources said on Tuesday.
Those conditions include no other rival chipmaker being part of the consortium and a stronger position for the U.S. firm in their joint chip venture, they said.
Scrambling to cover billions of liabilities at its U.S. nuclear unit, Toshiba needs an agreement in the next few weeks. According to one person with direct knowledge of the situation, Toshiba's board is aiming to vote on the new proposal at a meeting next week.
Sources declined to comment as they were not authorised to speak on the matter. Toshiba declined to comment on the auction process.
Western Digital, which has invested heavily in their chip joint venture, had been on the backfoot for much of the auction this year as Toshiba entertained other higher bids. Relations between the two frayed to the point where the U.S. firm, which argues no deal is possible without its consent, initiated legal action.
Toshiba shares rose nearly 5 percent on hopes that Western Digital's compromise, in which it would stay in the consortium but no longer offer financing, would help seal a deal.
But whether the revised proposal will be enough to get the Western Digital-backed consortium, which also includes U.S. private equity firm KKR & Co LP as well as Japanese government-backed investors, over the finishing line is unclear.
Toshiba remains wary that Western Digital is still angling to take control of the unit - worth $17 billion to $18 billion - at some point in the future, sources familiar with the matter said.
Just last week, Toshiba said it had not narrowed the pool of suitors and was also looking at a bid from U.S. private equity firm Bain, which has roped in Apple Inc to bolster its offer, as well as one from Taiwan's Foxconn.
It was not known if those bids were also reviewed by Toshiba's board on Wednesday.
One source said the Western Digital consortium was now sounding out Apple's interest in providing some financing to the chip business, although another source said this did not sound feasible.
The value of the revised offer from the Western Digital-backed consortium was not immediately clear.
Under its earlier proposal, the U.S. firm was offering to contribute 150 billion yen ($1.4 billion) through convertible bonds as part of the consortium's $17-18 billion offer, sources have said.
But Toshiba insisted that Western Digital limit the size of its stake in the chip unit to 15 percent over the next 10 years - a condition that the U.S. firm declined to accept, they added.
In exchange for withdrawing from the consortium, Western Digital is asking Toshiba for a larger share of the chip allocation at their plant. It is also demanding that Toshiba ensure the two firms invest jointly in new production lines, sources said.
Toshiba, after the board meeting, said it decided to build a new semiconductor manufacturing facility in Iwate, northern Japan, and was considering whether its chip joint venture partner SanDisk, owned by Western Digital, will take part.
Failure to clinch a sale of the chip unit in the next few weeks could mean that it may not clear all necessary regulatory approvals by the end of the financial year in March, which would likely lead to Toshiba reporting negative equity for two years in a row, increasing its chances of its shares being delisted. ($1 = 108.5700 yen) (Reporting by Makiko Yamazaki; Additional reporting by Kentaro Hamada and Taro Fuse, Taiga Uranaka, Junko Fujita and Chris Gallagher; Editing by Edwina Gibbs)