Western Digital announces company split after Kioxia merger talks break down

Western Digital will split itself into two companies involved in hard drives and flash memory. The company announced this a few days after talks about a merger with the Japanese Kioxia failed.

Western Digital’s Board of Directors has approved a plan to separate the company’s HDD and Flash businesses. This would create two independent, publicly traded companies. The divorce becomes according to W.D structured in a tax-free manner and will take place in the second half of 2024.

Western Digital’s revenue fell 26 percent last quarter compared to the same quarter last year, due to reduced demand for hard drives and flash memory. A split of WD into two companies should enable the company to ‘realize its full value’.

An investor with a nearly $1 billion stake in Western Digital, Elliott Management, previously called for a separation of the companies, says Reuters. Following the announcement of the demerger plans, Western Digital’s share price rose by approximately eight percent.

Merger talks between Western Digital and Kioxia Holdings collapsed a few days ago. South Korean competitor SK hynix opposed the deal. Bain Capital, Kioxia’s largest shareholder, also disagreed with the conditions.

Had the deal gone through, the combined company would have controlled a third of the memory market. That is comparable to the share of the market leader, Samsung Electronics. For SK hynix, this would jeopardize its position as number three in the memory market.