Kioxia would own 43% of the merged entity under the current plan, Western Digital would own 37%, and the remaining shareholders would own the remaining companies.
Kioxia Property Corp and Western Computerized Corp are accelerating consolidation talks and making certain about an arrangement structure, two sources with direct information regarding this situation said, as a drooping blaze memory market comes down on the world's No. 2 and No. 4 players.
Both Western Digital, a chipmaker based in the United States, and Kioxia, a company based in Japan, have experienced significant losses as a result of falling market demand and excessive supply. Combining their flash memory businesses could make them more competitive with rivals like Samsung Electronics in South Korea.
According to one of the sources, the merged entity would be owned by Western Digital (37%), Kioxia (43%), and existing shareholders of the companies (37%).
Because the talks are private, both sources declined to provide their names.
According to the sources, no decision has been made and the specifics may change. Several nations, including China and the United States, are likely to conduct anti-trust investigations into the proposed merger.
A spokesperson for Kioxia declined to respond to rumors. A request for clarification was not immediately met by Western Digital.
Since making its initial stock investment last year, activist investor Elliott Management, which owns convertible preferred shares in Western Digital, has been pushing the American company to separate its flash-memory division from its hard-drive division.
One of the sources said that a split like this would happen before Kioxia and flash memory combined, and the merged company might try to list after the deal.
In 2018, Toshiba Corp. sold Kioxia, which was previously Toshiba Memory, to a group led by Bain Capital for $18 billion. Due to the declining market for flash memory, it has put off plans for an initial public offering. Kioxia is still owned by Toshiba, or 40.6%.
One of the investors, Elliott, is on the board of Toshiba, and Elliott is also a Toshiba shareholder.
Toshiba itself is also going through a change. Toshiba has been offered $15 billion to be bought out by a group led by Japan Industrial Partners (JIP), but the company's board hasn't recommended the deal to shareholders because it thinks the price is too low.
According to a Toshiba filing, one of the factors that dragged down JIP's offer price was Kioxia's declining valuation.
According to the sources, it was not immediately clear what Toshiba would do with its stake in Kioxia in the event that the merger with Western Digital's flash memory business went through, nor was it clear how the deal would affect JIP's bid for Toshiba.
In 2021, negotiations for a merger between Western Digital and Kioxia came to a halt due to a number of issues, including differences in valuations. In January, the revival of the merger talks was reported by Bloomberg.
NAND flash memory chips, which do not require power to store data and are utilized in smartphones, personal computers, and data center servers, are produced jointly by the two businesses in Japan.
Western Digital and Kioxia would control a third of the global NAND flash market when they are combined, placing it on par with Samsung, the dominant player.
According to analysts, Western Digital and Kioxia have been more susceptible to the volatility of the NAND flash market than Samsung and SK Hynix Inc., which are also major players in the more tightly regulated DRAM chip market.
According to the sources, no decision has been made and the specifics may change. Several nations, including China and the United States, are likely to conduct anti-trust investigations into the proposed merger.
A spokesperson for Kioxia declined to respond to rumors. A request for clarification was not immediately met by Western Digital.
Since making its initial stock investment last year, activist investor Elliott Management, which owns convertible preferred shares in Western Digital, has been pushing the American company to separate its flash-memory division from its hard-drive division.
One of the sources said that a split like this would happen before Kioxia and flash memory combined, and the merged company might try to list after the deal.
In 2018, Toshiba Corp. sold Kioxia, which was previously Toshiba Memory, to a group led by Bain Capital for $18 billion. Due to the declining market for flash memory, it has put off plans for an initial public offering. Kioxia is still owned by Toshiba, or 40.6%.
One of the investors, Elliott, is on the board of Toshiba, and Elliott is also a Toshiba shareholder.
Toshiba itself is also going through a change. Toshiba has been offered $15 billion to be bought out by a group led by Japan Industrial Partners (JIP), but the company's board hasn't recommended the deal to shareholders because it thinks the price is too low.
According to a Toshiba filing, one of the factors that dragged down JIP's offer price was Kioxia's declining valuation.
According to the sources, it was not immediately clear what Toshiba would do with its stake in Kioxia in the event that the merger with Western Digital's flash memory business went through, nor was it clear how the deal would affect JIP's bid for Toshiba.