Western Digital Stock Spikes on Report It Nears Flash Memory Merger With Kioxia

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Western Digital

stock was trading sharply higher Monday after a report that merger talks with the company’s partner in flash-memory production, Kioxia Holdings, are speeding up.

Western Digital (ticker: WDC) produces both disk drives and flash-memory products. Most of the company’s flash-memory chips are produced through a joint venture with Japan-based Kioxia.

Soft demand in the flash-memory market is increasing pressure on the two companies to reach a mergaer agreement, Reuters reported.

Neither Western Digital nor Kioxia immediately responded to a request for comment.

In midday trading, Western Digital shares were up 9.7% to $36.24.

Last year, activist investor Elliott Investment Management urged Western Digital to spin off the flash-memory business, and the company later said it was considering a split.

Western, which along with rival

Seagate

(STX) dominates the market for hard-disk drives, entered the flash-memory business with the 2016 acquisition of SanDisk for about $19 billion. Western’s current market cap is $11.3 billion.

Kioxia was previously

Toshiba
’s
flash-memory business, which was sold in 2018 to a group led by Bain Capital for $18 billion. Toshiba still owns 40.6% of Kioxia.

Terms of the Western Digital-Kioxia deal, according to Reuters, would be 43% owned by Kioxia, 37% by Western Digital, and the rest by existing shareholders of the companies.

Write to Eric J. Savitz at [email protected]