Western Digital Acquirer Kioxia Needs Capital, Taps JIC As Merger Approaches Deadline

Kioxia Holdings Corp reached out to Japan Investment Corp to help with capital infusion to support its merger with Western Digital Corp WDC.

Kioxia's lenders look to submit a commitment letter by Friday to help facilitate the agreement, Bloomberg reports. The financial details regarding the capital infusion remain undisclosed.

The banks called for additional investment to bolster its balance sheet. 

JIC, a state-backed investment fund, is considering the request.

Kioxia and Western Digital look to ink a deal by October 30, when Western Digital will report quarterly earnings. 

The companies targeted the merger to create a holding company to integrate their operations, producing NAND flash memory chips.

The deal faced opposition from South Korea's SK Hynix Inc, a competitor in the memory chip business that became an indirect shareholder in Kioxia.

Banks, including Mitsubishi UFJ Financial Group Inc, Sumitomo Mitsui Financial Group Inc, and Mizuho Financial Group Inc, look to pledge ¥2 trillion ($13 billion) in loans to help fund the deal.

While some said SK Hynix has no veto rights over the deal, others said the company's consent will be necessary because it's a significant investor.

Reportedly, the companies could finalize a deal despite SK Hynix's resistance as Bain and Kioxia work on a resolution.

Some expect the companies to try to address SK Hynix's concerns after reaching a broad agreement.

The combined market share of Kioxia and Western Digital for NAND memories stood at 35.4% as of March, vs. Samsung Electronics Co, Ltd SSNLF at 34.3%.

Price Action: WDC shares traded lower by 0.14% at $43.00 premarket on the last check Friday.