Finally, Showa Denko and Hoya Will not Merge Rigid Disk Ops

Showa Denko K.K. (SDK) decided to terminate the discussions with Hoya Corporation (HOYA) concerning the planned consolidation of the two companies’ hard disk (HD) media operations.

On September 30, 2008, SDK and HOYA reached basic agreement to consolidate their HD media operations by establishing a joint venture in an effort to ensure sound growth of the business and strengthen competitiveness in a sustainable manner.

Since then, the two companies have continued to discuss and examine the matter. However, SDK and HOYA have judged that it will be difficult to establish the planned joint venture because of the recent drastic deterioration of the economic conditions and the changes in the environment of the industry.

The term of the basic agreement is to expire on March 29. As no concrete measures have been taken for the preparation of the consolidation, there will be no debts/credits resulting from the termination of discussions or the expiration of the basic agreement.
The above will not affect our performance forecast for 2009 announced on February 9, 2009 because it did not take into account the planned consolidation.

Comments

The HDD market is in bad shape and, consequently, it changes the strategy of the two companies to form a joint venture in magnetic rigid disks supposed to be 75% Showa and 25% Hoya. The two official reasons to cancel the deal:" the deterioration of the economic conditions and the changes in the environment of the industry". For the second one, it' could be the acquisition by Toshiba of the Fujitsu HDD business, as both of them were their customers.

It's probably better for the industry, principally for Samsung and Toshiba, as there are only three independent manufacturers of this platters: Showa, Hoya and Fuji Electric. The others makers are also assembling HDDs: HGST, Seagate and WD.

To read the announcement of the joint venture and our comments at this time:
Showa Denko and Hoya to Merge Rigid Disk Operations