Investors Seek to Resume Merger Discussions between Kioxia and Western Digital

Last autumn, objections from SK hynix, an investor in Kioxia, were widely considered to be the main obstacle preventing a merger between Japanese company Kioxia and Western Digital. The latter eventually decided to restructure its business in the second half of the current year. However, recent rumors suggest Bain Capital has developed an interest in reviving the deal.

This week, Kyodo news outlet reported the speculation, citing Reuters. Looking back, Bain Capital was instrumental in the 2018 purchase of Toshiba’s solid-state memory business, which paved the way for Kioxia to inherit these specialist assets. SK hynix’s stake in that deal was valued at around $2.67 billion, giving it the right to claim 15% of Kioxia’s shares upon bond conversion.

It is now reported that Bain Capital has initiated talks with SK hynix to revive the merger negotiations between Western Digital and Kioxia. Encountering resistance on the proposed acquisition of Kioxia, the American hard drive manufacturer resolved in October last year to carve out its flash memory business as a standalone entity. The restructuring is scheduled to conclude in the latter half of this year. Presumably, Bain Capital aims to present its alternative proposition before this deadline. Preliminary estimates suggest that a merger between Western Digital and Kioxia could birth the largest solid-state memory producer globally, a force capable of challenging even Samsung Electronics.