Activist investment firm Elliott Management, which manages a stake of nearly $1 billion in Western Digital, has urged the company’s Board of Directors to separate its hard disk drive (HDD) and Flash businesses.

In a letter to the Western Digital board, the New York-based investor has called for a full strategic review of the benefits of separating the two businesses.

It highlighted the company’s underperformance as a direct result of both divisions being run as one, with Western Digital’s acquisition of ScanDisk not proving to be the positive addition it had hoped for.

The firm acquired the company six years ago as it looked to grow its presence in the flash memory market – but Elliott said the move has held the overall business back on every level.

“By any objective measure, Western Digital has underperformed—operationally, financially and strategically—as a direct result of the challenges of operating two vastly different businesses as part of the same company,” the letter read. “This underperformance is particularly disappointing given the Company’s great potential in both businesses.”

Elliott argued that a full separation would allow both HDD and Flash to be more successful and unlock significant value. By doing so, the investor said Western Digital’s stock price could reach $100+ per share by the end of 2023 – representing a “uniquely attractive upside of approximately 100%.”

In addition to its public investment in Western Digital, Elliott said it is also offering more than $1 billion of incremental equity capital into the Flash business for either a spin-off transaction or as equity financing in a sale or merger with a strategic partner.

That represents an enterprise value of $17 to $20 billion, which Elliot says is close to the company’s entire current enterprise value.

“This investment proposal underscores our conviction on the merits of a separation as well as our belief in the long-term prospects of the Flash business,” the activist investor said.

In a statement responding to Elliott’s letter, Western Digital said: “Western Digital maintains an ongoing dialogue with our shareholders and values constructive input on our business. We agree that Western Digital is an excellent, yet undervalued, company with strong positions in our flash and HDD businesses and look forward to engaging with Elliott to discuss their views.

“Our Board of Directors is committed to acting in the best interests of all our shareholders and will carefully consider Elliott’s ideas.”