Shares of Western Digital tumbled Thursday after a report said the memory-chip maker pulled away from long-rumored merger talks with Kioxia Holdings. WDC stock closed trading down 9.3% on the stock market today.
Nikkei reported that the San Jose, Calif.-based Western Digital notified Japan's Kioxia Holdings that it would exit talks for the deal. The potential merger, which reportedly has been in negotiations since 2021, would create one of the world's largest chipmakers.
Earlier Thursday, the chief financial officer of South Korean chipmaker SK Hynix said on an earnings call that the company opposes the merger. SK Hynix is an indirect shareholder in Kioxia, which was spun off from Toshiba in 2018.
The companies could also not agree to terms with Kioxia's top shareholder, Bain Capital, according to Nikkei.
Western Digital did not immediately respond to a request for comment Thursday.
Reuters reported in May that Kioxia and Western Digital were in talks to combine into a memory-chip entity 43%-owned by Kioxia, 37% by Western Digital and the rest by shareholders of the two companies.
WDC Stock: Technical Ratings
Western Digital is a maker of both disk drives and memory chips. The reported combination with Kioxia came amid a supply glut and lower demand for memory chips.
To that point, the company has an abysmal IBD EPS Rating of 5 from a best-possible 99, indicating weak earnings results.
Further, WDC stock has an IBD Composite Rating of 63 out 99, according to IBD Stock Checkup.
