Could we see an ARM-Symetrixscenario for 4DS ?
On October 2 2020, ARM and Symetrix annouced the creation of Cerfe Labs, ajoint research company for the developpment of CeRam memory.
ARM transfered all CeRam patents and research team to Cerfe Labs.
ARM peoples will run the company and its research team. Symetrix will retainthe majority of the shares.
https://www.arm.com/company/news/2020/10/arm-spins-out-cerfe-labs-to-advance-development-of-ceram-memory-technology
In our case, 4DS will assume the role of Symetrix, and Sandisk - with all itsReRam patents and researches - the role of ARM.
Why this scenario could be interesting for4DS shareholders ?
Western Digital will always have the right to ask for a licence if the technology has some value.
Even if 4DS decide to end the JDA, WDC will have enough time to ask for a licence (one month) before the JDA ends. So, WDC will always be part of the story, if the technology w.orks as expected.
Imo, the chance to see a very high takeover price by a third party, for a technology already owned by WDC, are very thin.
Two large companies could share the developpment cost of a new technology, like Intel and Micron did for Optane,
But buying a non exclusive technology without any contact and agreement with the other company wich also own the tech, is a different thing.
In that case, the value of the technology is the value of a licence to use this technology, because paying more will put the buyer in a very disavantageous situation.
Two competitors using the same 4DS technology :
- One is Company X that will pay 1 billion dollar to access 4DS technology through a takeover
- The other is Western Digital that will pay a few millions for a licence (with probably a much better understanding of the tech, hence a shorter time to market)
This will never happen, imo.
And I don't think this is the plan.
Either 4DS will sell licences, or 4DS will be bought by Western Digital or by a group of companies led by WD.
But the ARM-Symetrix scenario offer an interesting alternative to that.
If 4DS holds a big share of a new joint developpment company created with Western Digital, or its subsidiary Sandisk,
this share of capital could reach a very high value in two or three years from now.
And this will warrant a quick and significant on market rerate for 4DS.
The new company will be owned by WDC and 4DS, and 4DS will be free to sell its share - to Micron for example - if significant progress are made and the technology is finally accepted by the industry.
Ok, this looks like a complicated way to reach a developpment project that both WDC and Micron could agree for right now.
In fact, it's all about the exit strategy that couldbe negociated with Western Digital in the next few months.
1 - Western Digital could buy 4DS with a scrip for scrip deal, and ask
Micron (or Samsung,...) to pay the development costs to mass production, if they want to co-own the tech through a developpment company.
2 - Western Digital and Micron could make a deal to buy 4DS together.
3 - Western Digital an Micron could take control of a listed SPAC that would later buy 4DS - This solution having the advantage to reduce the final cost for borh companies. Micron and WDC could sell some of their shares on the US market to recoup part of the price paid for 4DS.
I don't think Western Digital could do it alone, because all it's Fabs are co-owned by Kioxia, and Kioxia has too many competitors in its own capital.
As long as Kioxia/Toshiba crisis is not over, nothing new can be done in Japan by the Kioxia / WDC joint venture.
WDC should play this card ouside the joint venture (imo), and they don't have the money to do it alone.
One interesting thing with the ARM - Symetrix deal is that it's the second big strategical move to developpe a non-volatile memory, the first being the agreement between Intel and Micron for the developpment of Optane.
Things are starting to move in the non-volatile memory space.
And it is time to think about the best arrangement big players could find to take 4DS memory to market.
Our fate, as 4DS shareholders, will be defined by that ...if the technology works. One caveat, though.
The JDA could be less binding than what the board wanted us to think.
It could be just a standard agreement that WDC signs with every start-up that wants to use its research labs in California.
Many things in announcements made during the past few years, mentioning the JDA or the collaboration with Western Digital, give the impression that the board wanted to make the WDC support something much bigger than it is in reality.
They could have done that to foster investors confindence and to keep predators at bay.
If the new board could easily turn the JDA around, all the above reasonning is false.
For example, they could sign an agreement with another company to take the technology at another level using some other's patents.
In that case, what could be the rights of WDC on this technology if developped in collaboration with a third party ?
Or more simply, they could pay a few millions to WDC to forgo the licence agreement.
This could have been agreed for in the JDA.
But we don't know what is in the JDA
... So we know nothing.
To end this...
My gut feeling is that they will announce a change in the business organisation before announcing the PL3 results in september (in the hypothesis PL3 works as expected).
If the board think PL3 results are good, we will be served with a packaged deal that will give a futur to this company.
Not sure that it will please all shareholders, though.
The simplest deal being a CR that would give 10% of 4DS (and a seat to the board) to Western Digital or to some other company.
After that, the big takeover game will be over.
Any progress on the SP will depend on how close we are from selling something.
... Or, on a sudden market frenzy after a big technical update (and some PR) from the new 4DS.
In this scenario, the CR will certainly be valued above 10 c/share (to give some sens to the recent issue of options at 10c).
And that will put a floor under 4DS SP.
Sorry for this long post of speculations.
I don't expect anyone to read it, but it helps me to put my ideas in order.
What else to do on a long boring weekend ?
(All speculations, no financial advice)
(20min delay)
