Kioxia-Western Digital Merger Off Following SK Hynix Decision

Shortly after Korean DRAM and flash memory manufacturer SK Hynix, a major shareholder of Japan-base Kioxia, said it opposes the merger of Kioxia and Western Digital, Western Digital terminated the merger talks, according to Nikkei.

The long-speculated merger between Japan-based flash memory and SSD manufacturing giant Kioxia Holdings and flash and spinning disk developer Western Digital has likely been called off after a major Kioxia shareholder said it was not interested.

The negotiations between Western Digital and Kioxia were terminated after Western Digital notified Kioxia it would exit negotiations between the two, Japan-based online news site Nikkei reported Thursday.

The move by Western Digital to cancel merger talks came shortly after SK Hynix’s chief financial officer told analysts that his company was not agreeing to the merger at this time.

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Korea-based DRAM and flash memory chipmaking giant SK Hynix reportedly owns a 15-percent stake in Japan-based Kioxia.

Kim Woo-hyun, chief financial officer for SK Hynix, on Thursday responded to an analyst question during the company’s third fiscal quarter 2023 financial analyst conference call about the widely-reported merger plans between the company by saying, via an interpreter, that his company was not agreeing to the merger at this time.

“The company is not agreeing to the deal at this time, in light of the overall impact on the value of the company’s investment in Kioxia,” Kim said. “Please understand that we cannot disclose the specific reasons or comment on the deal process due to the confidentiality agreements with Bain. But I do wish to make one thing clear, we will be making the decision for the sake of all stakeholders, not only the shareholders but also Kioxia as well.”

While SK Hynix does not have voting rights in Kioxia, it does have the right to consent to the merger.

SK Hynix’s decision to put the merger agreement on hold follows news two weeks ago that Kioxia and Western Digital were getting close to agreeing on a merger of the two, which would form the world’s largest NAND memory manufacturer. Reports at the time suggested that just over 50 percent of the new company would be owned by Western Digital shareholders, with the remainder owned by Kioxia shareholders.

Kioxia, in response to a CRN request for more information, said via email that the company does not comment on rumors or speculation. Western Digital did not respond to a CRN request for further information by press time.