A new deal between Kioxia Holdings Corp., a computer memory manufacturer headquartered in Tokyo, and Western Digital Corp. could result in the companies embarking with a tax-free business spinoff.

According to sources, the merger has been in the negotiation phase for months but now the businesses are said to be moving forward by August.

The sources also suggested that Western Digital shareholders would own roughly 50% of the merged entity.

With shares of Western Digital having dipped by over 14% in the past year, the stocks began to rise by 6.5% last Friday and closed to 0.8% to $39.66 in New York. With the latest rise in stock pricing, now the corporation’s market worth has been evaluated at $12.7 billion.

According to the sources, the funding is secured for the business spinoff with Kioxia managers overseeing the corporation but that the Western Digital team will also be involved with both companies having board representation.

Housed in Japan, the merged corporation will trade on the Nasdaq originally but ultimately will trade in Tokyo.

Additionally, a company which backs Kioxia, Bain Capital, will be compensated a separate dividend, the sources said.

As of yet, a closing settlement hasn’t been reached but August still is a feasible timeline.

When the deal is reached, the companies will aim to challenge Samsung Electronics Co. market share which is one of the key drivers of merger.

In reference to the deal, Western Digital and Bain representatives declined to comment with Kioxia not responding either Bloomberg said.