Kioxia’s banks to refinance $13.5bn loan for Western Digital merger.
Kioxia's banks to refinance $13.5bn loan for Western Digital merger.
Kioxia Holdings and Western Digital’s Potential Merger: Lenders Plan to Refinance Loans
Tokyo, September 20, 2022
Kioxia Holdings, a leading flash memory manufacturer, and its potential merger with Western Digital’s flash memory business have attracted the attention of lenders. In a bid to support this promising merger, Sumitomo Mitsui Financial Group, Mizuho Financial Group, and Mitsubishi UFJ Financial Group are planning to refinance ¥2 trillion ($13.5 billion) in loans. The refinancing package, according to Bloomberg News, will also include provisions for special dividends to Kioxia’s shareholders. However, this report has not been officially confirmed by the companies involved.
Kioxia Holdings has been a prominent player in the flash memory market, while Western Digital has established a strong presence in the hard drive business. As the deal stands, Western Digital is expected to hold approximately 50.5% of the combined company, with Kioxia holding the remaining 49.5%. Notably, Western Digital’s hard drive business is not anticipated to be part of the merger agreement.
Amid a slump in the flash memory market, Kioxia and Western Digital have expedited their merger talks, aiming to solidify the deal structure swiftly. This move could potentially strengthen their market position and enable them to navigate the challenging landscape more effectively. Although Kioxia refrained from commenting on the recent report, it signifies the progress being made behind closed doors.
To fund a significant portion of the ¥2 trillion loan, ¥400 billion is expected to come from loan commitments. Furthermore, the Development Bank of Japan will provide a ¥300 billion loan. The remaining balance will likely be evenly divided among the three major Japanese banks involved in the refinancing initiative: Sumitomo Mitsui Financial Group, Mizuho Financial Group, and Mitsubishi UFJ Financial Group.
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This strategic move not only affirms the lenders’ confidence in the potential merger but also highlights the financial strength and stability of the participating institutions. It also demonstrates their commitment to supporting innovative and disruptive ventures in the technology sector.
The flash memory market is undergoing a period of transformation and consolidation. Rapid advancements in technology and increasing demand for storage solutions have spurred companies like Kioxia and Western Digital to explore strategic partnerships.
Overall, this potential merger between Kioxia Holdings and Western Digital’s flash memory business could lead to a stronger market player, capable of driving innovation and meeting the evolving needs of consumers. The lenders’ decision to refinance loans emphasizes their belief in the long-term growth potential of the flash memory industry, despite the current challenges. As this exciting development continues to unfold, industry observers eagerly await further news from Kioxia and Western Digital.
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