Western Digital stock gains on report merger talks with Kioxia restarted

Western Digital Corp. (NASDAQ:WDC) rose 8% in after hours trading after a report that the memory-chip firm has resumed merger talks with Japan’s Kioxia Holdings.

The parties are discussing merging into one public company, according to a Bloomberg report, which cited people familiar. The talks resumed late last year are still at an early stage.

The report comes after initial talks between the companies for a merger stalled in October 2021. The WSJ and others first reported in August 2021 that Western Digital was close to a deal to merge with Kioxia in a transaction that could be worth more than $20 billion.

The news also comes after Western Digital (WDC) announced in June that it was exploring strategic alternatives, including separating its flash and HDD business. The disclosure followed after activist Elliott Management disclosed a stake in May and pushed for the company to explore separating the company.

Kioxia is owned by private-equity firm Bain Capital. While the company’s name might not be as well-known outside of Japan, it was once called Toshiba Memory and has a long track record in the semiconductor industry.

Kioxia, the world’s second-biggest maker of NAND flash memory chips, was also said in 2021 to be considering an initial public offering if it didn’t merge with Western Digital (WDC).

Memory chip giant Micron Technology (MU) rose 1.6% in after hours trading, while Western Digital rival Seagate (STX) gained 2.9%.

Earlier a Daiwa analyst said Micron may have 30% upside as the memory market may be close to bottoming.