Western Digital will split the business into two parts one

Western Digital will split the business into two parts, one company will produce flash memory and the second will produce hard drives

Before the publication of the quarterly reports, negotiations over the takeover of the Japanese company Kioxia were stopped and the American company Western Digital announced a very obvious “Plan B”: its solid-state memory business would be spun off into an independent company, and in the hard drive segment the group would focus on the growing demand for cloud computing. Data warehouses.

    Image source: Western Digital

Image source: Western Digital

The decision to restructure the company, the official said Press release Western Digital was unanimously approved by the company’s board of directors. Both companies created as a result of the restructuring remain listed and are not dependent on each other in their management structure. According to WD representatives, such a restructuring plan opens up strategic opportunities for both parts of the company. The restructuring is expected to be completed in the second half of the next calendar year and the transaction will be tax-free.

According to CEO David Goeckeler, Western Digital shareholders “will be able to participate in the market growth of two industry leaders.” As the company boss made it clear, both companies have been preparing for an independent existence at an operational level in recent years. After considering various strategic alternatives, the company’s management decided that in order to realize the full potential of the flash storage business, it needed to be separated from the parent company. At least at a certain point in time, exactly this scenario is feasible, as the WD press release shows. The expected improvement in the market situation will clearly demonstrate all the advantages of the strategic decision to separate the business.

It is important that after dividing the company into two parts, management remains open to suggestions for implementing various strategic opportunities that increase the return on investment in the field of hard drive and solid-state storage manufacturing. The implementation of some strategic alternatives is currently being prevented by certain restrictions, as the head of Western Digital explained. He apparently suggested that SK hynix opposed the asset merger deal with Japanese company Kioxia, which ultimately gave the WD board the determination to implement an alternative restructuring plan for the company.

Before implementing the restructuring agreement, WD must undergo a financial review process and obtain the necessary approvals from US regulators, particularly taking into account the company’s intention to implement everything under a tax-free scenario. News of the company’s impending split encouraged investors, sending WD shares up 14% in premarket trading in New York.

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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