A Western Digital office building is shown in Irvine, California, United States, on January 24, 2017.
Western Digital said on Monday that it would split itself into two companies that will focus on the hard drive and flash memory markets, days after merger talks with Japan’s Kioxia stalled.
Western Digital shares were up more than 12% before the bell.
The company launched a review last year after activist investor Elliott Management disclosed a nearly $1 billion investment in Western Digital and pushed it to separate those businesses.
Reports last week said merger talks between Western Digital and Japan’s Kioxia Holdings had stalled as opposition from Kioxia investor SK Hynix made the deal more difficult.
Western Digital is struggling with a global chip boom and weak demand for flash memory products, which in turn has increased pressure on chipmakers to consolidate.
If the Western Digital-Kioxia deal had gone through, the combined company would have controlled a third of the global NAND flash market, equal to the top player Samsung Electronics and threatening the position of Hynix, the 3rd largest manufacturer of the world’s NAND flash memory. .
“Given the current constraints, the Board has become clearer in recent weeks that delivering a standalone separation is the right next step in Western Digital’s evolution and puts the company in the best position to unlock value for our shareholders.” CEO David Goeckeler said.
The separation of the businesses is planned to be structured in a tax-free manner and targeted for the second half of 2024, according to the company.