UPDATE 1-Western Digital CEO in Japan to finalise Toshiba chip deal -source

* Aims to announce deal by Aug 31 when Toshiba board meets-sources

* Toshiba, Western Digital decline to comment (Adds Toshiba, Western Digital decline to comment, background)

TOKYO, Aug 28 (Reuters) - Western Digital Corp's chief executive is in Tokyo to finalise an agreement to buy Toshiba Corp's memory chip business, ending months of dispute over the auction, a person familiar with the matter told Reuters on Monday.

Toshiba is scrambling to sell its flash memory unit to cover losses from its bankrupt U.S. nuclear business Westinghouse.

A group including Western Digital, U.S. private equity firm KKR & Co and Japanese government investors are offering around 1.9 trillion yen ($17.3 billion) for the unit, separate sources previously told Reuters. The U.S. firm is offering 150 billion yen through convertible bonds, they said.

The group and Toshiba aim to announce a deal by Aug. 31 when Toshiba's board meets, other people said on Monday.

Both Western Digital and Toshiba declined to comment. A KKR representative could not be immediately reached.

Some senior Toshiba executives had initially balked at Western Digital's offer, but sources said on Friday that the U.S. 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. (Reporting by Makiko Yamazaki; Editing by Himani Sarkar)