Since 2021, there have been rumors about Western Digital’s intention to merge its solid-state storage holdings with Japanese company Kioxia. South Korean company SK hynix, an indirect investor in Kioxia, has not yet commented on the issue, but this week its chief financial officer Kim Woohyun openly stated that the manufacturer had objections to the likely deal.
According to him, what he quotes Bloomberg, the deal between Western Digital and Kioxia will have a negative impact on SK hynix’s previous investments in the latter company’s capital. Recall that in 2018, an investment consortium led by Bain Capital spent about $18 billion to buy up the assets of the former Toshiba Memory Corporation. South Korea’s SK hynix provided $856 million to finance this transaction and ultimately received convertible bonds that could be exchanged for about 15% of Kioxia’s shares in the future.
Last week it was also revealed that a group of Japanese banks was involved in financing a possible deal between Western Digital and Kioxia, willing to provide a total of more than $13 billion. Such a deal would create the largest provider of solid-state storage in the world, and SK Hynix is clearly not interested in the emergence of a strong competitor, on the development of which it once indirectly spent its own funds.
According to Bloomberg, Kioxia and Western Digital are currently discussing the final details that may be changed in the agreements on the upcoming deal, and they plan to announce their decision to combine core assets next week, as Western Digital is scheduled to release quarterly reports on October 30. Some sources believe that the same Bain Capital fund, which was involved in the deal that later created Kioxia, will help soften SK hynix’s position. Experts believe that without SK Hynix’s consent, it will be difficult for the parties to implement the merger of Western Digital and Kioxia’s assets, although the Korean company has no direct ability to block the deal.