Get Western Digital Corporation Reportshares rallied higher Tuesday as activist investors renewed their push for change at the chipmaker and called for the sale of its flash memory business.
activists at Elliott Management, which claims a 6% share in the firm valued at around $1 billion, pledged another $1 billion in investment to help fund a spin-off, sale, or merger with a strategic partner of the flash memory corporation, which it believes would be between $17 billion and $20 billion.
Western Digital, based in San Jose, is developing flash memory chips in Japan as part of a business arrangement withKioxia, which was sold by Toshiba Corp. to a private equity consortium led by Bain Capital in 2018, is one of the world''s largest NAND chipmakers in the world, and a key supplier to Apple Inc.''s (AAPL) - Get Apple Inc. ReportiPhones.
Samsung Electronics and SK Hynix, both from South Korea, have purchased Intel Corp.''s (INTC) and have competed with the Intel Corporation Reportflash memory business in 2020 for roughly $9 billion.
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Western Digital, which attempted to buy Kioxia four years ago, purchased SanDisk Corp. in 2016, but was under serious pressure at the time for the $17 billion transaction, which some believe was at an all-time high.
"We believe that a complete separation of the Flash business will allow both HDD and Flash to be more successful and unlock significant value," the letter said. "We believe that Western Digitals'' stock price might reach $100+ per share by the end of 2023, representing a remarkable positive of roughly 100%."
"We are requesting that the Board conduct a comprehensive strategic review of these ideas, confident in our view that a comprehensive, independently looking at the value potential will point decisivively toward a separation of HDD and Flash," Elliott said. "Though the majority of this board and management team were not involved in the SanDisk decision, it is likewise this Board''s responsibility to address current market realities and set the Company on the right path."
In pre-market trading, Western Digital''s stock was marked 1.1 percent higher, indicating a $59.90 opening bell price.