Western Digital and Kioxia NAND flash memory business merger enters final stage

Western Digital and Kioxia have fostered a collaborative bond in the realm of storage that spans over two decades, jointly investing in the research and production of NAND flash memory. Their respective product lines have been strategically distinguished to minimize direct competition. Recently, they’ve been in advanced negotiations regarding the potential consolidation of their NAND flash production ventures.

As per industry sources, an array of banks, including Sumitomo Mitsui Financial Group, Mizuho Financial Group, and Mitsubishi UFJ Financial Group, are poised to present commitment letters next month, underpinning a refinancing proposal of 2 trillion yen (approximately $134.88 billion) to facilitate the merger of Western Digital and Kioxia’s NAND flash production operations.

A portion of this loan is designated for the disbursement of special dividends to Kioxia’s existing shareholders, with Bain Capital and Toshiba presently holding stakes of around 56.24% and 40.64% respectively in Kioxia. In the merged entity, Kioxia and Western Digital will possess equity interests of 50.5% and 49.5% respectively. The senior management team, predominantly composed of Kioxia’s original personnel, will steer day-to-day operations. As per previous reports, the merged company envisions adopting a dual board structure, with headquarters anchored in Japan. Initial plans entail a listing on the NASDAQ in New York, followed by a subsequent listing in Tokyo.

While Western Digital and Kioxia had initially targeted August of this year to finalize their merger agreement, intricate details necessitated its deferment, prolonging negotiations. Insiders intimate that the deal remains shrouded in uncertainty, with the potential for further delays, reductions, or even the dissolution of talks. Should the merger ultimately fall through, the banks would likely retract the aforementioned loan proposal under discussion.