Is SK Hynix opposed to this acquisition?

It is reported that the merger negotiations between Kioxia, a major NAND flash memory manufacturer, and Western Digital Electronics (WD, Western Digital) have entered the final stage, and a merger agreement is expected to be reached within this month, and After the merger, it will be listed on the Nasdaq in the United States, and the new company's board of directors will be controlled by Kioxia Duan. However, it is reported that South Korea's SK Hynix (SK Hynix), which indirectly invests in Kioxia, objects, so whether it can be completed within this month There are still variables in reaching an agreement.

Kyodo Communications, Nikkei Shimbun, Asahi Shimbun and other Japanese media reported on the 13th and 14th that the merger negotiations between Kioxia and its partner Western Digital have entered the final adjustment stage and are expected to be completed within this month (within October) A merger agreement was reached. As the memory market deteriorates, we hope to prepare for future investment competition by expanding our scale. Kioxia and Western Digital will negotiate financing conditions and other details with financial institutions before October 20. Although the two parties plan to reach a merger agreement within this month, South Korea's SK Hynix, which indirectly invested in Kioxia, objects, so There are still variables, and after reaching a merger agreement, it will enter the competition law review process of various countries, and whether it can obtain permission from the Chinese authorities is still uncertain.

The report pointed out that Kioxia and Western Digital will establish a holding company "KIOXIA Holdings". Western Digital's memory business and Kioxia will be integrated into the holding company to engage in the research and development and production of NAND Flash. In terms of the merger proportion based on enterprise value, Kioxia accounts for 63% and Western Digital accounts for 37%. However, after capital adjustment, the final investment proportion of the holding company is 50.1% for Western Digital shareholders and 50.1% for Kioxia shareholders. 49.9%. Toshiba, which currently holds about 40% of the equity of Kioxia, will also become a shareholder of the holding company, and Kioxia President Nobuo Hayao will serve as the president of the holding company, and Kioxia Duan will control more than half of the seats on the board of directors. , that is, Kioxia Duan will control the actual management rights.

According to reports, the holding company is headquartered in Japan, and in order to easily raise funds for equipment investment, it will be listed on the Nasdaq market in the United States, and later plans to be listed on the Tokyo Stock Exchange. When Kioxia and Western Digital merged, the three major Japanese banks including Mitsubishi UFJ and the Japan Policy and Investment Bank considered providing financing of 1.5 trillion to 1.9 trillion yen.

In the NAND Flash market, Kioxia and Western Digital rank third and fourth largest in the world respectively. After the merger, their scale will be close to that of the leading manufacturer Samsung. According to the British research company Omdia, Samsung's NAND Flash market share will reach 34% in 2022, and Kioxia and Western Digital's combined market share will be 32%.

According to the quote from the MoneyDJ

Kioxia announced its financial report on August 9 and pointed out that due to the sluggish demand for smartphones and other products, the NAND Flash market continued to deteriorate, dragging down the consolidated net income in Q2 2023 (April-June) from the same period last year. 42.6 billion yen turned into a loss of 103.1 billion yen, falling into losses for the third consecutive quarter. The quarterly loss exceeded 100 billion yen for the second consecutive quarter. The predecessor of Kioxia "Toshiba Memory" was launched in April 2017, the second worst in history. (Only lower than the loss of 130.9 billion yen from January to March 2023).

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