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Western Digital buys Hitachi Storage for $4.3B




Storage company Western Digital has just entered into an agreement to buy competing company Hitachi Global Storage Technologies for $4.3 billion in cash and stocks.

The acquisition will increase the combined market share of WD in the storage business. We don’t know yet if the combined market share of both will match that of Seagate. In 2005, a similar merger also happened when Seagate bought Maxtor for an estimated $1.9 billion.

Full copy of press release below.

IRVINE, Calif. and SAN JOSE, Calif. – Mar. 7, 2011 – Western Digital (NYSE: WDC) and Hitachi, Ltd. (NYSE: HIT / TSE:6501)announced today that they have entered into a definitive agreement whereby WD will acquire Hitachi Global Storage Technologies (Hitachi GST), a wholly-owned subsidiary of Hitachi, Ltd., in a cash and stock transaction valued at approximately $4.3 billion. The proposed combination will result in a customer-focused storage company, with significant operating scale, strong global talent and the industry’s broadest product lineup backed by a rich technology portfolio.

Under the terms of the agreement, WD will acquire Hitachi GST for $3.5 billion in cash and 25 million WD common shares valued at $750 million, based on a WD closing stock price of $30.01 as of March 4, 2011. Hitachi, Ltd. will own approximately ten percent of Western Digital shares outstanding after issuance of the shares and two representatives of Hitachi will be added to the WD board of directors at closing. The transaction has been approved by the board of directors of each company and is expected to close during the third calendar quarter of 2011, subject to customary closing conditions, including regulatory approvals. WD plans to fund the transaction with a combination of existing cash and total debt of approximately $2.5 billion.


 

WD expects the transaction to be immediately accretive to its earnings per share on a non-GAAP basis, excluding acquisition-related expenses, restructuring charges and amortization of intangibles.

The resulting company will retain the Western Digital name and remain headquartered in Irvine, California. John Coyne will remain chief executive officer of WD, Tim Leyden chief operating officer and Wolfgang Nickl chief financial officer. Steve Milligan, president and chief executive officer of Hitachi GST, will join WD at closing as president, reporting to John Coyne.

“The acquisition of Hitachi GST is a unique opportunity for WD to create further value for our customers, stockholders, employees, suppliers and the communities in which we operate,” said John Coyne, president and chief executive officer of WD. “We believe this step will result in several key benefits3Ž4enhanced R&D capabilities, innovation and expansion of a rich product portfolio, comprehensive market coverage and scale that will enhance our cost structure and ability to compete in a dynamic marketplace. The skills and contributions of both workforces were key considerations in assessing this compelling opportunity. We will be relying on the proven integration capabilities of both companies to assure the ongoing satisfaction of our customers and to bring this combination to successful fruition.”

“This brings together two industry leaders with consistent track records of strong execution and industry outperformance,” said Steve Milligan, president and chief executive officer, Hitachi Global Storage Technologies. “Together we can provide customers worldwide with the industry’s most compelling and diverse set of products and services, from innovative personal storage to solid state drives for the enterprise.”

Hiroaki Nakanishi, president, Hitachi, Ltd. said, “As the former CEO of Hitachi GST, I always believed in the potential of Hitachi GST to become a larger and more agile company. This is a strategic combination of two industry leaders, both growing and profitable. It provides an opportunity for the new company to increase customer and shareholder value and expand into new markets. Additionally, it is important to us that WD shares common values with Hitachi GST to create a more global company that is well positioned to define a broader role in the evolving storage industry.”



Abe is the founder and Editor-in-Chief of YugaTech. You Can follow him on Twitter @abeolandres.

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19 Responses

  1. Ralp says:

    Wow. expecting more with WD!

  2. So, is it Seagate versus Western Digital now? Or has it been a long time that it was Seagate versus Western Digital?

  3. Harley Son says:

    loving WD!

  4. leo says:

    panu kaya yun samsung nyan? wla cla kakampi…

  5. adam says:

    This is normal for competing company. Sometimes in order to win against their competitor company’s either buy them or try to merge with them. What is important about it is the benefits it would give to the stakeholder. :-)

  6. The acquisition will give make the combined share of WD & HGST 50% of the market. They will become the biggest market share holder. The other 50% is shared between Seagate, Samsung, TDK, etc.

  7. John says:

    Hmm.. Pretty Intresting.. Will it affect Hitachi LG joint venture?

  8. Benchmark33 says:

    Kaya pala nag sale ang WD coz they will be flooded with Hitachi unit hard drive…hehehehe ganun ba yun? hehehe

  9. Ethan Tremblay says:

    I will still go for seagate. Seagate offers more products than western digital….BEFORE, but now.. hmm.. let’s see.. =))

  10. Ethan Tremblay says:

    hahaha I’m expecting right now for more giveaways from WD via yugatech..

  11. Skyflakes_18 says:

    Whatever happened to Maxtor?

  12. reikoku says:

    maxtor was already acquired by seagate years ago

  13. dan says:

    Still im loving seagate when they started years back on 80gb ide hehe, ive tried wd and they are fast on external devices havent tried using them as internals since seagate does the job

  14. I just hope they maintain the separate brands until they standardize the technology. Haven’t had good experiences with Hitachi 2.5″ drives in the past, and WD seems to have straightened up its act.

  15. jo sab says:

    Hi I’m a product engineer in Hitachi GST. Para sakin mas reliable yung HDD namin keysa sa seagate and WD. Binili ng WD ang Hitachi GST kasi gusto nila magkaroon mas reliable na HDD.

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