The stock rose in late afternoon trading Wednesday after a report that the company is in “advanced” talks to merge with Japan-based Kioxia Holdings.
Shares of Western Digital (ticker: WDC) rose 7.5% to $65.31 at 3:20 p.m.
(MU) shares rose 3.8% to $74.71. Kioxia is a close-knit company that makes flash memory used in data centers, smartphones, and other storage.
The potential deal, worth more than $20 billion, follows months of discussions between the two memory companies, and the companies could reach an agreement by mid-September. according to The Wall Street Journal. Citing unnamed sources, the Journal said Western Digital would pay for the stock deal and that Western Digital CEO David Goeckeler would lead the combined company.
Western Digital declined to comment. Kioxia did not immediately return a request for comment.
The Journal said the deal had not yet been finalized and Kioxia could still choose to take over the company public through an IPO, which it planned to complete last year until it drew plans due to market conditions. Kioxia has held talks with Western Digital and Micron, which are less interested in a potential transaction, the Journal said. A deal would likely entail regulatory approval in Japan, the US and China.
Earlier this year, the Journal reported that the deal would be valued at about $30 billion. According to FactSet, Western Digital’s market value is approximately $18.9 billion. Kioxia was once
‘s memory chip unit. It is controlled by a group of investors that once included Bain Capital,
Toshiba and others.
Chipmakers have begun to consolidate as the cost of designing and manufacturing the complex silicon-based technology rises significantly. Companies without sufficient scale struggle to compete in markets where the most advanced chips cost more than $500 million to easily design.
But much of the consolidation has taken place outside the memory sector. Last year,
(NVDA) announced it plans to buy Arm for $40 billion, a deal that has been delayed by various regulatory investigations into its implications. Several major tech companies have spoken out against Nvidia’s plans to acquire the chip technology company from
Advanced Microdevices (AMD)
announced a plan to buy
for $35 billion, and Marvell has made two acquisitions: it bought Inphi for $10 billion, and more recently it said it would buy Innovium for $1.1 billion.
However, there have also been memory deals.
(INTC) agreed to sell its memory chip unit to South Korean SK Hynix in 2021.
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