Why Is Western Digital Stock Rising?

Western Digital Corp WDC shares are trading higher Monday following reports the company is in merger talks with Japan's Kioxia Holdings.

What To Know: According to a Bloomberg report citing people familiar with the matter, Western Digital and Kioxia are engaged in ongoing merger talks which has led to a rough structure being put in place for a potential deal. 

The report indicates that the current structure of the deal would eventually involve a dual-listing in Japan. Western Digital would also spin off its flash business, merging it with Kioxia, creating a publicly traded company in the United States.

The companies are still working on details of the deal, but an official announcement could be made in the next few months. 

In mid-2022 activist investor Elliott Management called on Western Digital to spin of its flash business. The activist firm noted at the time that a spin off could help drive Western Digital stock to $100 per share by the end of 2023.

Related Link: Why Salesforce Stock Is Surging Today

Exane BNP Paribas analyst Karl Ackerman upgraded Western Digital from Underperform to Neutral Monday morning.

Western Digital is set to report its fiscal second-quarter financial results after the market close on Jan. 31.

WDC Price Action: Western Digital has a 52-week high of $63.26 and a 52-week low of $29.73.

The stock was up 4% at $40 Monday morning, according to Benzinga Pro.

Photo: courtesy of Western Digital.