Western Digital Reaches Agreement with Activist Investor Elliott, Considers Splitting
2022.06.08 14:30
Western Digital Reaches Agreement with Activist Investor Elliott, Considers Splitting
By Senad Karaahmetovic
Western Digital (NASDAQ:WDC) has come to an agreement with Elliot Management, an activist investor that pushed the memory storage maker to consider splitting off its flash memory and hard disk drive (HDD) units.
Western Digital issued a statement saying it would explore different strategic moves such as dividing the company into separate businesses focused on PC hard drives and flash memory storage devices, as per the Wall Street Journal.
Last month, Elliot Management disclosed a 6% stake in the $19 billion memory storage maker and sent a letter to the company, urging it to consider splitting off its businesses.
Western Digital said it would look into Elliot’s suggestions, with the CEO David Goeckeler saying that the company and Elliot had been holding talks over potential strategic alternatives to boost WD’s valuation.
In 20202, the San Jose, California-based company established separate units for its two businesses, a decision that was supported by Elliott.
At the same time, Japan-based computer memory manufacturer Kioxia Holdings is still open to negotiations over a potential deal with Western Digital, the report says.
The two memory storage makers first started negotiating in early 2021 when they discussed a potential stock deal that would have produced a memory-chip giant. However, the negotiations failed to advance further, in part due to a sharp decline in WD’s shares.
Elliot Management said it would consider investing at least $1 billion in equity if Western Digital decides to pursue a spin-off or a merger of its flash unit in conjunction with another company from the industry.
