‘WD and Kioxia stopped talks about merger, are still interested in deal’

Western Digital and Kioxia have stopped discussions about their proposed merger. Insiders report this to Reuters. The two parties remain interested in completing the deal, which has been discussed since 2021.

Sources tell Reuters that WD and Kioxia broke off their merger talks because they could not agree on the terms. This follows shortly after memory maker SK hynix, an indirect investor in Japan’s Kioxia, opposed the takeover. SK hynix says it believes that its share was ‘undervalued’ in the intended deal.

Among other things, the companies could not agree on the terms with Bain Capital, a top investor in Kioxia. Bain made a major investment in Kioxia in 2018, along with several other companies, including SK hynix. The South Korean memory maker then invested 395 billion yen in Kioxia. At the current exchange rate, this amounts to almost 2.5 billion euros.

With a merger, the combined company of WD and Kioxia would control about a third of the memory market. This corresponds to the share of market leader Samsung. According to Reuters, this would jeopardize SK hynix’s position as number three in the memory market.

Representatives from both WD and Kioxia are still working to resolve issues surrounding the deal, including SK hynix’s objection to the merger. Both companies are still interested in completing the deal, Reuters sources said. The companies previously wanted to complete the deal this month, Japanese business newspaper Nikkei reported a few weeks ago. It is not known whether this will still work.

American Western Digital and Kioxia, formerly known as Toshiba Memory, have been discussing a possible merger since 2021. During that period, those talks have often stalled on a number of points, including disagreements about the value, Reuters writes. There are also concerns about potential problems with competition regulators, especially those in China.