Western Digital has been preparing for big changes for several months, planning a merger with the Japanese company Kioxia. However, a few days ago, news spread around the world that both entities were completely suspending merger talks. Now it seems that based on this information, the board of directors decided to make an important decision to divide the American company. According to CEO David Goeckeler, the company is perfectly prepared for this purpose.
After an unsuccessful merger with the Japanese company Kioxia, Western Digital decided to split into two separate entities. However, the decision is still awaiting approval by the management board and the Securities and Exchange Commission.
The board of directors of Western Digital, after the failed merger with the Japanese company Kioxia, decided unanimously to approve the division of the company into two separate entities. The first one is to deal entirely with the production of HDD hard drives, while the second one will deal with broadly understood flash memory (memory cards, SSD drives, NVME M.2 SSDs e.t.c.). According to CEO David Goeckeler, the company is perfectly prepared for this purpose, because in recent years the management of business units responsible for HDD drives and flash-based products. The division is expected to take place in the second half of 2024, and the entire process will be exempt from taxation in the US. However, the decision has not yet been ratified by the company’s board of directors and the US Securities and Exchange Commission.
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CEO Western Digital noted that: “Our HDD and Flash businesses are well-positioned to capitalize on the significant market dynamics in the storage industry, and as separate companies, each will have the strategic focus and resources to capitalize on opportunities in their respective markets. Importantly, the separation These franchises will unlock significant value for Western Digital shareholders by enabling them to share in the profits of two industry leaders with different growth and investment profiles.” So David Goeckeler argues that the transition currently taking place will benefit not only the two future companies, but also WD’s current shareholders. The decision seems to result from different dynamics in the memory markets of a given type, differences in the recipients of the final product and in the production process itself. It is also difficult to shake the impression that the board of directors’ decision is a kind of plan “B” for a failed merger with the company. Kioxia or accelerating the company’s later intentions.
Source: Western Digital, TechPowerUp