• 4
  • Comment
  • Favorite

Western Digital, Japan's Kioxia Call off Merger Talks -Source

Reuters2023-10-27

TOKYO, Oct 26 (Reuters) - Western Digital and Japan's Kioxia Holdings have called off merger talks after failing to agree on terms of a deal that would have created one of the world's largest memory chip makers, a person familiar with the matter said on Friday.

South Korea's SK Hynix - a major Kioxia investor and rival to both the U.S. and Japanese companies - has said it does not back the deal due to its impact on its investment asset value.

The Nikkei business daily, which first reported the news, also said the companies were unable to agree on conditions with top Kioxia shareholder Bain Capital.

The person spoke on condition of anonymity because of the sensitivity of the matter.

Combining their flash memory businesses could mean they would control a third of the global NAND flash market, on par with top player Samsung Electronics, and threaten the position of SK Hynix, the world's No. 3 maker of NAND flash memory.

Western Digital, Kioxia and Bain Capital did not respond to Reuters' requests for comment.

Shares of Western Digital plunged 9.3% on the news.

The companies were pursuing a merger in the face of a global chip glut and weak demand for flash memory chips, which have increased pressure on chipmakers to consolidate.

Kioxia and Western Digital have held merger talks since 2021 but the negotiations have often stalled over a series of issues, including valuation discrepancies.

The merger would have given the companies "an opportunity to cut cost and be a more effective competitor in the market," said Mark Miller, analyst at Benchmark Company.

"But it was a very complicated deal to get done. I'm not sure China would approve the deal either."

The companies reported a combined loss of roughly $1.4 billion in their latest quarterly reports.

Last year, Western Digital launched a review of strategic alternatives, after activist Elliott Investment Management disclosed a stake of nearly $1 billion in the company and pushed it to separate those businesses.

Japan's top banks were set to commit 1.9 trillion yen ($12.63 billion) financing to support the merger, Reuters had reported last week.

SK Hynix invested 395 billion yen in Kioxia in 2018 as a member of a Bain-led consortium that bought the Japanese firm from Toshiba Corp for 2 trillion yen. It holds convertible bonds that can be converted into an equity stake of up to 15% in Kioxia and its approval was one of the preconditions for the merger.

($1 = 150.4200 yen)

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Report

Comment

  • Alfred1007
    ·2023-10-27
    As usual
    Reply
    Report
 
 
 
 

Most Discussed

 
 
 
 
 

7x24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Company: TTMF Limited. Tech supported by Xiangshang Yixin.

Email:uservice@ttm.financial