Merger negotiations between Western Digital and Kioxia stand – sources

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A Western Digital office building is shown in Irvine, California, United States, January 24, 2017. REUTERS / Mike Blake / File Photo

Oct. 21 (Reuters) – Western Digital Corp (WDC.O) talks for a merger with Japanese chipmaker Kioxia Holdings Corp have stalled, according to two people familiar with the matter, highlighting challenges related to the entering into agreements in the evolving semiconductor industry.

Talks in recent weeks have focused on a range of issues, including valuation spreads, uncertainty over whether to secure Japanese government approval and an ongoing strategic review of Kioxia shareholder Toshiba. Corp (6502.T), people said.

Western Digital is still keen to keep the deal going on the right terms, said the people, who requested anonymity to discuss private matters.

A spokesperson for Kioxia said the company did not comment on the speculation, while Western Digital was not immediately available for comment.

Earlier in August, media outlets including Reuters reported that Western Digital was in advanced talks for a possible $ 20 billion stock merger with Kioxia, with the aim of creating a NAND memory giant to compete with Samsung. Electronics (005930.KS). Read more

Kioxia, sold by Toshiba in 2018 to a consortium led by Bain Capital, shelved its proposed initial public offering last year after trade tensions between the United States and China hit Huawei, one of Kioxia’s biggest customers.

The Kioxia spokesperson said the company is still considering an appropriate time for an IPO. A public market listing, if it occurs, will likely take place next year, sources said.

Kioxia’s business has benefited from purchases of electronics powered by the pandemic and longer-term demand for new chip technology, including 5G connectivity.

A Kioxia-Western Digital handset would control a third of the NAND flash market, putting it on par with South Korea’s Samsung Electronics.

Any rapprochement between Japanese and US companies should ensure that critical operations are evenly split between the two countries, a senior official for the ruling party in Japan told Reuters last month. Read more

The Wall Street Journal first reported the stalled talks earlier Thursday.

Reporting by Tiyashi Datta in Bengaluru, Krystal Hu in New York and Makiko Yamazaki in Tokyo; Editing by Devika Syamnath and Lincoln Feast.

Our Standards: The Thomson Reuters Trust Principles.


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