Shares of Western Digital (NASDAQ:WDC) are up 10% in pre-open after Elliott Investment Management, which holds a roughly $1 billion stake in WDC, today sent a letter to the Board of Directors of Western Digital.
The letter is calling WDC to review the company’s business structure and suggests creating “two vastly different businesses, hard disk drives (HDD) and NAND flash memory (Flash).”
Eliott noted that WDC’s underperformance is “a direct result of the challenges of operating both the HDD and Flash businesses as part of the same company.”
The investment management firm says WDC stock could double to over $100+ per share by the end of 2023 in case these changes are implemented.
Moreover, Elliott also offered over $1 billion of equity investment into the Flash business at a valuation of $17 billion to $20 billion. WDC has a market cap of $16.87 billion, based on yesterday’s closing price.
“Today, we are calling on the Board to conduct a full strategic review of these ideas, confident in our view that a comprehensive, independent exploration of the value potential will point decisively toward a separation of HDD and Flash. Though the majority of this Board and management team were not involved in the SanDisk decision, it is nevertheless this Board's responsibility to address current market realities and set the company on the right course,” it is said in the letter.
Elliott has over $50 billion in AUM.
By Senad Karaahmetovic