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   Technology StocksWDC, NAND, NVM, enterprise storage systems, etc.


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To: Sam who wrote (4631)3/31/2021 7:49:52 PM
From: Elroy
   of 4710
 
Yeah, or just sell the disk business to Seagate, and merge the NAND groups of WDC and Toshiba (easy cuz it’s a JV) into MU.
Then the CapEx consolidation can occur in NAND like it has occurred in DRAM.

Not sure how SIMO fits in there, but.....they all still need controllers!

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To: Elroy who wrote (4632)3/31/2021 8:58:20 PM
From: Sam
   of 4710
 
They will never be allowed to sell the HD division to Seagate. They are already the only two HD vendors. There cannot be just one.

As difficult as it is to believe, the HD business is still viable. Heck, the tape business is still viable, decades after being declared dead.

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From: Sam4/1/2021 12:54:08 PM
3 Recommendations   of 4710
 
Kioxia Sales Talks Could Spur Micron to Buy Western Digital, Analyst Speculates -- Barrons.com
DOW JONES & COMPANY, INC. 12:22 PM ET 4/1/2021

Symbol Last Price Change
69.565 +2.815 (+4.2172%)
91.39 +3.18 (+3.605%)
QUOTES AS OF 12:49:54 PM ET 04/01/2021


Consolidation could be coming to the flash-memory chip market, and investors are excited about the possibilities.

After the close of trading on Wednesday, The Wall Street Journal reported that both Western Digital(WDC) and Micron Technology(MU) are considering an acquisition of Kioxia Holdings, a Japanese memory-chip company, for about $30 billion.

Kioxia, which originally was Toshiba's memory-chip business, is controlled by a group of investors that includes Bain Capital, SK Hynix, and Toshiba, among others. The Journal said a deal could be completed later this spring. Last year, Kioxia had planned to go public, but withdrew its initial public offering amid volatile market conditions.

The news emerged right in the middle of a call Micron held with analysts and investors to discuss its results for the February quarter. Both the numbers and management's financial forecasts were better than expected as a result of growing demand and improved pricing for both DRAM and flash memory chips.

But the focus Thursday is not on the strong results, but on the potential further consolidation of the flash-memory sector. In October, of course, Intel (INTC) said it had agreed to sell its flash business to Hynix.

The Kioxia situation is complicated by the fact that the Japanese company's chip-fabrication plants are operated in joint ventures with Western Digital(WDC). The two companies evenly split production; Western Digital(WDC) doesn't independently own its own fabs.

Another complication is that Western Digital's(WDC) current market capitalization, at about $22 billion, is well below the $30 billion the Journal reported as a purchase price for Kioxia. Western Digital(WDC) has been working to reduce debt left over from its $19 billion acquisition of SanDisk in 2016. At year-end, Western had just under $9 billion in long- term debt outstanding, offset by about $3 billion in cash.

Micron is a larger company by market cap, at about $104 billion. In that sense, it would seem better positioned to acquire Kioxia. But that would create a complicated relationship that would have Western in a joint venture with a key rival.

In a research note Thursday morning, Susquehanna Financial Group analyst Mehdi Hosseini says the logical solution would be for Micron to buy Western Digital(WDC). In that scenario, the current joint ventures between Western Digital(WDC) and Kioxia would remain intact, he says, while providing Micron with "best in class manufacturing assets without owning the assets." He thinks Kioxia could then still proceed with its previously contemplated IPO.

He also says that the $30 billion price tag the Journal floated for Kioxia suggests Western Digital(WDC) shares are greatly undervalued, given the company owns half of Kioxia's fabs. Barron's made a similar point in a Tech Trader column last September .) The implication is that Western Digital's(WDC) own flash business would have a similar value, which would suggest investors are getting the Western Digital(WDC) disk-drive business for less than zero.

Hosseini estimates that Kioxia and Western Digital(WDC) together control about 34% of the NAND market, with Samsung just behind at 33%, and SK Hynix and Intel combined at 16%, and Micron at 14%. He estimates that Western has about 15%-20% of the enterprise solid-state drive market, with Samsung at about 50%, Intel at 25%. and Hynix and Micron at under 5% each.

The analyst thinks that Micron's NAND business is becoming "increasingly marginalized" given the pending SK Hynix deal for Intel's NAND unit.

"Acquiring Western would help Micron with access to additional NAND wafers while not having to deal with a high capex structure," he writes. "Kioxia and Western Digital(WDC) [and predecessor SanDisk] have been partners and competitors for decades. The same three-way partnership could exist with Micron acquiring Western Digital(WDC), which would effectively sustain the JV structure while enabling Micron to secure additional NAND wafer capacity without building any new fabs."

Both Western Digital(WDC) and Micron declined to comment. Kioxia didn't respond to a request for comment.

The potential for a Micron bid for Western Digital(WDC) raises the question whether Micron would keep Western's hard- disk drive business, which basically operates in a near duopoly with its chief rival, Seagate (STX). Last fall, Western Digital(WDC) announced a reorganization of its business to effectively separate the flash and drive businesses, a move that created speculation on the Street that Western could eventually split into two companies.

The company has repeatedly denied that it might do that. But it isn't hard to envision Micron spinning off or selling Western's hard-drive business as part of the transaction.

On Thursday, Western Digital(WDC) shares spiked 5.9% to $70.67, Micron gained 4.9% to $92.51 and Seagate rose 1% to $ 77.55.

Write to editors@barrons.com

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From: Sam4/1/2021 7:07:06 PM
1 Recommendation   of 4710
 
When It Comes To Any Deal, '$30B For Kioxia Is Rich' Says Wedbush -- Market Talk
Dow Jones Newswires April 01, 2021 03:55:00 PM ET

1555 ET - Wedbush sees the potential purchase of NAND chipmaker Kioxia as a possible near-term negative for Micron, despite positive industry implications of consolidation. WSJ reports that Micron and Western Digital are each separately exploring a possible deal for Kioxia--the former Toshiba memory business--that could value the Japanese company at around $30B. "We believe $30B for Kioxia is rich," says Wedbush, "and could prove to be a distraction particularly given some uncertainty, in our view, as to whether China would approve any such combination."Wedbush adds that while a Kioxia deal would make strategic sense for Western Digital, "we struggle to see how such a deal would be constructed in light of WD's current debt load and relative market cap." ( maria.armental@wsj.com ; @mjarmental)

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To: Sam who wrote (4635)4/2/2021 8:48:46 PM
From: Unwelcomeguest
   of 4710
 
I think he meant to say, '...as to whether China (Japan) would approve any such combination.'


Am I right???


UWG

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To: Unwelcomeguest who wrote (4636)4/2/2021 10:55:59 PM
From: Sam
   of 4710
 
I don't know. I would guess that Japan would approve it with the same kind of conditions that they approved the Elpida deal with Micron.

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To: Sam who wrote (4637)4/3/2021 3:49:13 PM
From: Unwelcomeguest
1 Recommendation   of 4710
 
I just can't figure out what China would have to say about it and I don't believe they have any standing to say anything, actually.

UWG

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To: Unwelcomeguest who wrote (4638)4/7/2021 10:08:34 PM
From: SiliconAlley
   of 4710
 
I just can't figure out what China would have to say about it and I don't believe they have any standing to say anything, actually.

The Anti
-Monopoly Law applies to all companies doing business within China. Any conduct (inside or outside China), that curtails competition, falls under this act. Yes, China does have standing.

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From: Sam4/8/2021 7:57:24 AM
   of 4710
 
Activists Get Their Moment in Japan With $21 Billion Toshiba Bid
By Gearoid Reidy and Min Jeong Lee
April 7, 2021, 4:15 AM EDT Updated on April 7, 2021, 8:09 PM EDT

CVC bid comes after Toshiba CEO lost crucial vote at EGM
After false dawns, ‘activism is taking hold’ in Japan: analyst

The surprise takeover bid for Toshiba Corp. is a palpable demonstration of the growing influence in corporate Japan of activist investors, who have gone from largely impotent onlookers to kingmakers in the space of just a few years.

The offer from CVC Capital Partners, while still in the early stages, comes just weeks after Toshiba Chief Executive Officer Nobuaki Kurumatani lost a landmark shareholder vote, forcing an independent investigation into alleged issues with voting at its annual general meeting last year.

That loss has piled pressure on Kurumatani, who barely won re-election at last year’s meeting and is seen as unlikely to survive another. The vote was triggered by Toshiba’s largest shareholder, the secretive Singapore-based hedge fund Effissimo Capital Management.

Any deal for Toshiba faces legal hurdles, and analysts say that investors such as Effissimo would likely insist on a substantial premium from Tuesday’s closing price. But the episode shows that the influence of activism in Japan is becoming hard to deny.

“There have been false dawns before,” said Justin Tang, head of Asian research at United First Partners in Singapore. “But activism is taking hold now.”

Flexing MusclesCVC offered about 5,000 yen per share in its buyout proposal, according to a Toshiba executive. A bid at that level would value Toshiba at about 2.28 trillion yen ($20.7 billion) and represent a 31% premium to its last close before news of the bid emerged, data compiled by Bloomberg show.

That would make it the largest private equity-led buyout since 2013, and CVC’s biggest acquisition on record. Toshiba’s board plans to form a special committee to consider the proposal, said the executive, who asked not to be identified discussing confidential information.

While there are many hurdles to a deal taking place, Toshiba shares rose by their daily limit of 18% to 4,530 yen per share at the close Wednesday in Tokyo. The stock gained as much as 5.7% more on Thursday.

“Considerable value would be created simply by simplifying ownership and clarifying governance by taking the company private,” said Nicholas Benes, an expert on Japanese corporate governance. “Precisely because of that, one would very much hope that this is a case where Toshiba will be open to other bids, by both other PE firms as well as strategic acquirers.”

Activist investors have increasingly been flexing their muscle in Japan in recent years, as corporate governance reforms promoting shareholder value have meant management can no longer dismiss such pressure. Tokyo Dome Corp. will be delisted this month after acquisition by a white knight last year to fend off pressure from activist investor Oasis Management Co.

Once a storied name in Japan, Toshiba has faded dramatically since its glory days after years of management missteps and scandal. The conglomerate invented flash memory three decades ago, but it was forced to sell most of its prized chip business in 2018 because of losses in its nuclear-power operation. That deal led to an infusion of cash -- but also a large contingent of more vocal shareholders. Last week, Singapore fund 3D Investment Partners became the latest investor to say it may make make proposals to management, boosting its stake to more than 7%.

“Any successes of this nature will probably snowball and lead to more activity,” said Damian Thong, an analyst at Macquarie Group Ltd. “There is a sense that a large part of Japan’s industrial base is being run inefficiently, resulting in apparent undervaluation of Japanese conglomerates.”

Kioxia Options

One open question for Toshiba is the future of Kioxia Holdings Corp., its former memory-chip division in which its still holds the biggest stake. Kioxia is focused on going public as soon as this summer in an IPO that could value the business at more than $36 billion, Bloomberg News reported last week. Alternatively, Micron Technology Inc. and Western Digital Corp. are each to be interested in acquiring the firm, the Wall Street Journal reported.

If Toshiba secures a reasonable market valuation for Kioxia, and its core businesses attract multiples similar to those of its Japan peers, Thong said he sees scope for over 1 trillion yen of shareholder value creation. That would imply a Toshiba share price of over 6,500 yen per share, compared with the CVC offer at 5,000 yen apiece.

Mio Kato of LightStream Research sees a low possibility of the deal going through under current terms, and expects volatile trading for Toshiba’s shares in the near term depending on how things develop. Toshiba’s shareholders, especially activists, will want a rather “steep price,” he wrote in a note published on SmartKarma.

Given the sensitivity around several of Toshiba’s bushinesses, including its deep involvement in decommissioning the wrecked Fukushima Dai-Ichi nuclear power plant, government approval would be required for the deal, Chief Cabinet Secretary Katsunobu Kato said Wednesday.

It’s unclear if a foreign firm such as CVC would be allowed to take control of Toshiba. The relationship between CVC and Toshiba executives -- with Kurumatani a former Japan president and external director Yoshiaki Fujimori still employed by the firm -- has also raised eyebrows.

“This could simply be an attempt to buy time for Kurumatani,” Kato said.

$20 Billion Toshiba Bid Puts Japan Activist Investors in Spotlight - Bloomberg

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To: Sam who wrote (4640)4/10/2021 9:53:00 PM
From: Unwelcomeguest
   of 4710
 
I am just spitballing here, but I think Micron will make an offer to buy WDC to consolidate their NAND capacity with their own and sell off the HDD division to someone else. I don't think WDC has the capitalization or borrowing power to buy Kioxia, but MU could pull it off if they wanted to. But, why not just buy WDC for less and get half the capacity of the JV with WDC for a lower price? The $64,000 question is, what would the price be? If MU is able to work out a price with WDC before the Kioxia IPO is priced, they might make out better. Would WDC be willing to accept an offer before the Kioxia IPO? I suppose that depends on what they think of the offer.

As much as I think WDC would like to end up with Kioxia, I think they are dreaming. It's just too much for their pocket book and current debt level. So, if you accept that the industry is consolidating, WDC may not have the horsepower to compete with the remaining much larger players in the market after the Kioxia IPO unless WDC is purchased by MU.

Disclosure, I am holding both stocks, but I have reduced my WDC holdings to just a couple thousand shares and shifted capital to MU over the past few months.

UWG

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