SK Hynix does not approve the merger of Kioxia and Western Digital. SK Hynix, an indirect shareholder in Kioxia, views the merger as unfavorable to the value of its investments.
Recently, Japan’s Kioxia and U.S. Western Digital announced plans to merge their NAND flash memory businesses. With this, the number three and four in this market segment wanted to form a bigger fist against market leader Samsung.
SK Hynix, the number two in the NAND flash memory segment, does not consider the merger for the time being, according to Bloomberg. The Korean chip maker is an indirect shareholder in competitor Kioxia and therefore should or could have a say in the possible merger with Western Digital.
Also read: Kioxia and Western Digital looking to merge
Unfavorable for share value
According to the Korean chip producer, the merger would be unfavorable for the value of its own share in Kioxia. For its own shareholders, as well as those of Kioxia, SK Hynix will make a decision later.
Other reasons for the blockade are not given by the chip manufacturer at this time, but a threat to its own market share within the NAND flash memory market could also be a reason.
SK Hynix acquired its stake in 2018 when a consortium led by Korean investor Bain Capital acquired the memory division-now Kioxia-from Japan’s Toshiba Group.
According to Bloomberg, it is still unclear whether SK Hynix’s objections will actually lead to a delay. Kioxia and Western Digital, independent of the Korean chip maker, may be able to bring negotiations with Bain Capital to a successful conclusion. Also, SK Hynix would not have veto rights.
Time is running out
All parties did not comment on the possible blockage. However, time is running out for both parties for a final announcement of the merger of the NAND flash memory business. Western Digital would like to announce it before presenting its quarterly results on Oct. 30.