(Bloomberg) — Western Digital Corp. is in talks to merge with Japan’s Kioxia Holdings Corp. in a deal that could unite two technology storage providers, according to a person familiar with the matter.
A deal, which could be worth more than $20 billion, may be reached by mid-September at the earliest if negotiations are successful, the person said, asking not be identified because the matter is private. Talks could still fall apart and Kioxia, which is closely held, is still also pursuing an initial public offering, the person added.
A spokesman for Kioxia said the company is preparing for an IPO at the right time and declined to comment on “market rumors and speculation.” A representative for Western Digital declined to comment.
Western Digital shares rose 7.8% in New York after the talks were reported by the Wall Street Journal, giving the company a market value of about $20 billion. Toshiba Corp., which spun off Kioxia in 2018 and remains a large shareholder, gained 2.1% in Tokyo.
Samsung Rival
A combination of the longtime joint venture partners would create a bigger competitor for Samsung Electronics Co. in the market for memory chips used as storage in portable devices and computers.
Toshiba, the inventor of flash memory, sold a majority stake in Kioxia in 2018. That type of chip is taking over for data storage from hard disk drives, Western Digital’s main product.
Kioxia and Western Digital had combined sales of about $17 billion in flash memory chips last year, according to IDC Corp. Samsung had $18.6 billion. Industry sales jumped 37% in 2020.
Western Digital has provided Kioxia with funds for capital expenditure and research and development in return for production out of its Japanese partner’s plants. The relationship has been fractious in the past involving a bitter dispute when Western Digital, under a previous chief executive officer, tried to acquire Kioxia when Toshiba was suffering financial difficulties as a result of its nuclear power division’s troubles.
Kioxia filed for an IPO last summer in which shareholders including Toshiba and Bain Capital were planning to sell shares.
(Updates with Toshiba share in fourth paragraph)
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