Western Digital is said to be in advanced stages of a merger with Japan’s Kioxia. According to a Wall Street Journal report, the storage giants could precipitate a deal as early as mid-September. It is thought that WDC would pay about US$20 billion in stock to close the agreement. WDC’s share price was boosted nearly 8 per cent on Wednesday, fuelled by this report.
If WDC and Kioxia get together, it is estimated that the combined business would serve almost a third of the flash storage market worldwide. For WDC, the folding in of Kioxia assets would provide a batch of flash memory manufacturing assets and equipment aside from intellectual properties.
As reported on hexus.net, currently WDC and Kioxia operate closely via joint ventures, so it is easy to understand how this merger is a natural extension of such behaviour. Another bonus for WDC out of this deal is that with Kioxia’s manufacturing under its control, it will be better able to control supply of flash memory (which is a commodity). If the merged entity behaves wisely with regard to manufacturing output, it will be able to help reduce the under/over-supply issues that face this type of industry. Competition rules mean that the two firms can’t ‘collude’ like this, as they exist separately right now.
Earlier this year, Kioxia made its intentions of going public via an IPO known, but it pulled back from this decision due to market conditions. Though the WDC and Kioxia talks are advanced, the IPO option is still one that Kioxia might choose, until the deal is signed and sealed, according to the WSJ.