Following months of negotiations, Western Digital and Kioxia are on the brink of finalizing a merger agreement, according to Bloomberg, which cites sources with knowledge of the matter. The agreement involves spinning off Western Digital's NAND flash business and combining it with Kioxia.
The merger details remain confidential, but the report claims that Western Digital shareholders would gain control of slightly more than half of the joined company. As for the daily management of the combined entity, it has been suggested that it will be led primarily by Kioxia's executive team. However, Western Digital executives would also play a significant role.
Notwithstanding the advanced negotiations, the final agreement is not yet in place, and the timeline could change. In fact, discussions may conclude without an agreement at all.
The merged company will have a dual board representation system with both chipmakers contributing members. The company will be based in Japan and initially listed on the Nasdaq, with plans to eventually list in Tokyo. Meanwhile, Bain Capital, a major investor in Kioxia, would receive a special dividend.
Despite producing 3D NAND at the same fabs, Kioxia and Western Digital, each maintains their distinct business strategies, with Kioxia's primary focus being on sales of the memory chips. In contrast, Western Digital's approach leans towards supplying finished NAND-based products, including some of the best SSDs available.
As of Q1 2023, Kioxia commanded a 21.5% stake in the NAND memory, while Western Digital secured a 15.2% share, according to TrendForce. On the other hand, Samsung distributed 34% of NAND memory during the same period. With this in mind, the prospective merged entity of Kioxia and Western Digital's flash businesses is set to become the leading supplier of NAND memory worldwide, with over 36.7% of the market share.
