© Reuters. File photo: KIOXIA gadgets can be seen at COMPUTEX Taipei, one of the world’s largest computer and technology trade shows in Taipei, Taiwan, May 24, 2022. REUTERS/Ann/File photo
TOKYO (Reuters) -Western Digital Corp and Japan’s Kioxia Holdings have broken off talks to create one of the world’s biggest chipmakers, the newspaper reported on Thursday.
The U.S.-based company earlier in the day notified Kioxia it would exit the talks after the merger failed to secure approval from SK Hynix, an indirect shareholder in Kioxia, the newspaper said, without saying where it got the information.
The companies were also unable to agree on conditions with top Kioxia shareholder Bain Capital, it added.
Western Digital (NASDAQ:) and Bain Capital did not immediately respond to Reuters’ requests for comment.
Shares of Western Digital sank 12% on the news.
The companies were pursuing a merger in the face of a global chip glut and weak demand for flash memory chips, which have increased pressure on chipmakers to consolidate.
Kioxia and Western Digital have held merger talks since 2021 but the negotiations have often stalled over a series of issues, including valuation discrepancies.
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