SK hynix Effectively Becomes the Second-Largest Shareholder of Rival Japanese Firm Kioxia
SK hynix has become the second-largest shareholder of Japanese semiconductor company Kioxia. This development follows Bain Capital's massive sale of its Kioxia shares, which previously made it the company's largest shareholder.
According to Nikkei Shimbun on July 26, Bain Capital announced that it had sold most of its Kioxia shares through a recent substantial shareholding report, reaping approximately 2.5 trillion yen (about 22 trillion won) in proceeds. As a result, Toshiba, which holds a 15% stake in Kioxia, has now become the largest shareholder, while SK hynix has risen to the position of second-largest shareholder by holding a 14% stake via a special purpose company (SPC). However, SK hynix is not currently a shareholder with voting rights, since it has not yet converted its convertible bonds (CB) into shares.
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Following Bain Capital, Toshiba is also pushing for the sale of its Kioxia shares, meaning that SK hynix could potentially become the de facto largest shareholder in the future. Toshiba has been selling its stake since the first half of the year; the stake, which was initially in the 40% range, dropped to 18.5% in March last year, and has recently fallen to about 15.1%. However, for SK hynix to become a shareholder with voting rights, it must gain approval under competition and antitrust laws in various countries. Previously, SK announced that it would not hold more than 15% of Kioxia's voting rights until 2028.
Kioxia is a direct competitor of SK hynix in the NAND flash market. For this reason, the Japanese government is reported to be closely monitoring the shareholding structure of the two companies. SK hynix holds about a 20% share of the NAND market, ranking second after Samsung Electronics. In a recent report, Kioxia stated, "Although SK hynix has not yet converted its bonds into shares, the necessary procedures under various national antitrust, foreign exchange, and external transaction laws may already be underway."
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