4 Nov - Commercial Awareness - Tech
Topic: Western Digital walked away from merger with Kioxia
https://www.ft.com/content/28b822f3-63bc-4cc6-b39e-50fe996aaad6
Western Digital is a California-based semiconductor maker
Kioxia is one of the largest manufacturers of NAND flash memory. It is a semiconductor unit under Toshiba.
Private equity was also involved. Bain Capital led a consortium that bid for Kioxia at $18bn back in 2017, which was the biggest PE-led deal in Japan at the time.
The merger was seen as Bain’s ambition to exit and consolidate a strong semiconductor supply chain between US-Japan.
However, the South Korea-based competitor, SK Hynix, opposed to the deal. Despite having $3.5bn investment in the Bain-led investment, the deal was perceived to threaten its market share. The merged entity is twice the size of SK.
Bain also struggled to go through an IPO. It planned to list Kioxia in 2020, but COVID and US-China tensions have halted the plan. Kioxia is still considering an IPO but the global demand for memory chips have fallen. It appears that PE firms are struggling to get a clean exit and make returns on their investments.
Shares in Western Digital fell by 6% after the announcement.
