Western Digital Weighed Strategic Alternatives Including Business Split

  • Western Digital Corp WDC had weighed strategic alternatives, including splitting its businesses focused on traditional hard drives for computers and flash memory.
  • Western Digital settled with activist investor Elliott Management Corp calling for the $19 billion company to consider splitting into two, the Wall Street Journal reports.
  • Previously Elliott disclosed a 6% stake in Western Digital and urged the company to explore a breakup that could see the stock price could climb above $100 per share by the end of 2023.
  • Also Read: Here’s Why Analysts Remained Bullish On Western Digital Post Q3
  • Elliott expressed interest in investing an additional $1 billion or more in equity in a potential spinoff or merger of the flash business with another industry player.
  • In 2020, Western Digital looked to form separate units for its two businesses.
  • Japanese chip maker Kioxia Holdings Corp was still open to a possible deal with Western Digital after discussing an agreement to create a memory-chip powerhouse. The talks slowed due to a persistent decline in Western Digital’s shares.
  • Kioxia’s business would be a logical fit for Western Digital’s flash unit, which Elliott estimated could command an enterprise value of $17 billion to $20 billion, roughly equal to Western Digital’s market cap before its shares surged following Elliott’s campaign.
  • Price Action: WDC shares closed higher by 4.54% at $62.43 on Tuesday.
  • Photo via Wikimedia Commons

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