Japan’s Kioxia and U.S. chipmaker Western Digital are speeding up merger talks and finalizing a deal structure due to a slump in demand for flash memory, Reuters said. The industry believes that after the business merger of the two parties, it can improve its competitiveness in the face of South Korea’s Samsung Electronics and other competitors.
Under plans now being worked out, the combined entity would be 43 percent owned by Kioxia, 37 percent by Western Digital and the remainder by existing shareholders of both companies, one of the sources said. Both sources declined to be named because the talks are private.
The two sides are still in talks and no decisions have been made so details could change, the sources said. It is worth mentioning that if the two parties merge, they will also need to start anti-monopoly reviews in several countries, including the United States and China.
A Kioxia spokesperson declined to comment on the speculation. Western Digital did not immediately respond to a request for comment.
I believe everyone is not too unfamiliar with these two companies. Kioxia, formerly known as Toshiba Memory, was sold by Toshiba in 2018 to a consortium led by Bain Capital for US$18 billion. Its plans for an initial public offering have been put on hold due to a deterioration in the flash memory market, and Toshiba still holds a 40.6 percent stake in Kioxia.
According to reports, Kioxia and Western Digital will conduct merger negotiations in 2021, after which the negotiations reached a deadlock due to a series of issues including valuation differences. Bloomberg reported in January that the two sides had restarted merger talks.
