Western Digital to buy Hitachi disk-drive unit
Posted: Tue Mar 08, 2011 12:07 amWestern Digital to buy Hitachi disk-drive unit for $4.3 billion
Irvine-based Western Digital will acquire Hitachi's storage-device subsidiary, one of its competitors, with a combination of cash and stock. Shares of Western Digital surge on the news.
Irvine-based hard-drive maker Western Digital Corp. is buying a competitor -- the storage-device subsidiary of Japanese giant Hitachi Ltd. -- for $4.3 billion in cash and stock.
Western Digital, one of the largest companies of its kind, will shell out $3.5 billion in cash and 25 million common shares -- worth about $750 million based on the $30.01 closing price on Friday -- for Hitachi Global Storage Technologies.
The deal would result in "significant operating scale, strong global talent and the industry's broadest product lineup backed by a rich technology portfolio," the companies said in a statement.
Western Digital is currently the top player in the hard-disk-drive market, shipping 52.2 million units in the fourth quarter of 2010, according to recent data from IHS iSuppli. Hitachi Global Storage Technologies is third with 30.3 million units, behind the 48.9 million drives shipped by rival Seagate Technology.
Parent company Hitachi, which makes products ranging from construction tools to televisions to high-speed trains, will end up owning 10% of all Western Digital's outstanding shares once the deal closes in the third quarter. Two Hitachi executives will also join the Irvine company's board.
Hitachi Global Storage's chief executive, Steve Milligan, who left a post as Western Digital's chief financial officer in 2007 to join Hitachi, will return as Western Digital's president. He will report to Chief Executive John Coyne.
Both companies' boards have approved the deal. In morning trading on Monday, Western Digital stock jumped nearly 20% at one point, to $35.78.
Rising sales of tablet devices such as Apple Inc.'s iPad is tamping down hard-disk-drive shipments, which are already suffering amid declining demand for PCs, according to IHS iSuppli.
Irvine-based Western Digital will acquire Hitachi's storage-device subsidiary, one of its competitors, with a combination of cash and stock. Shares of Western Digital surge on the news.
Irvine-based hard-drive maker Western Digital Corp. is buying a competitor -- the storage-device subsidiary of Japanese giant Hitachi Ltd. -- for $4.3 billion in cash and stock.
Western Digital, one of the largest companies of its kind, will shell out $3.5 billion in cash and 25 million common shares -- worth about $750 million based on the $30.01 closing price on Friday -- for Hitachi Global Storage Technologies.
The deal would result in "significant operating scale, strong global talent and the industry's broadest product lineup backed by a rich technology portfolio," the companies said in a statement.
Western Digital is currently the top player in the hard-disk-drive market, shipping 52.2 million units in the fourth quarter of 2010, according to recent data from IHS iSuppli. Hitachi Global Storage Technologies is third with 30.3 million units, behind the 48.9 million drives shipped by rival Seagate Technology.
Parent company Hitachi, which makes products ranging from construction tools to televisions to high-speed trains, will end up owning 10% of all Western Digital's outstanding shares once the deal closes in the third quarter. Two Hitachi executives will also join the Irvine company's board.
Hitachi Global Storage's chief executive, Steve Milligan, who left a post as Western Digital's chief financial officer in 2007 to join Hitachi, will return as Western Digital's president. He will report to Chief Executive John Coyne.
Both companies' boards have approved the deal. In morning trading on Monday, Western Digital stock jumped nearly 20% at one point, to $35.78.
Rising sales of tablet devices such as Apple Inc.'s iPad is tamping down hard-disk-drive shipments, which are already suffering amid declining demand for PCs, according to IHS iSuppli.