Investment Fund Proposes Flash Business Separation to Western Digital
🟦 Western Digital proposes to split
Western Digital was asked to separate its NAND flash memory business from its investment fund. The proposal was made in a letter sent to management by Elliott Management, a U.S. investment fund known as a vocal shareholder. Elliott already owns 6% of Western Digital shares. It also proposed to invest an additional $1 billion (about 130 billion yen) to encourage the divestiture and independence of the business.
Western Digital “agrees to be an excellent but underrated company with a strong position in the flash and HDD business, and we look forward to working with Elliott to discuss their views.”
🟦Suggest focusing on HDDs rather than NAND
Western Digital’s two main businesses are hard disk drives (HDDs) and NAND flash memory. The NAND business acquired SanDisk in 2015 for $19 billion. If he concentrates on the HDD business again, the stock could soar to at least $100 by the end of next year.
Western Digital and Kioxia are collaborating on NAND flash memory. There has been a proposal for Western Digital to acquire Kioxia, but things are not going smoothly.
🟦 Conclusion
As Western Digital concentrates on HDD business, vocal shareholders propose separation of flash business
Currently, Western Digital’s enterprise value is around $20 billion. From the perspective of shareholders, the $19 billion acquisition of SanDisk does not seem to have had an effect. It would be best if Kioxia could acquire the NAND business, but it will probably cost about 1.5 trillion yen.
