Memory chip makers Western Digital and Kioxia Holdings are holding advanced talks about a merger.

Bloomberg reports that Western Digital plans to spin off its flash business and merge it with Kioxia, creating a publicly traded company in the US. It would then also plan a second stock listing in Japan.

Western Digital management are expected to run the combined company. An announcement could occur in the next few months, unless the deal changes significantly or falls apart.

The two companies first discussed a merger back in 2021, with Western Digital offering $20 billion in stock. But the deal fell apart, with Kioxia saying it was focused on an initial public offering (IPO).

Last year, activist investor Elliott Investment Management called for Western Digital to split the flash business it ran after acquiring SanDisk for $19bn in 2015.

In June, Western Digital announced a review of strategic alternatives following the pressure from the shareholder, which owns six percent of the company.

Shares in Western Digital rose around 2.4 percent following the report.

Spun out of Toshiba in 2018, Kioxia has still not had its IPO. It delayed a listing on the Tokyo Stock Exchange in 2020 due to US-China tensions, and again in late 2022 due to a steep drop in demand for NAND memory chips.