WD Hitachi Western Digital To Acquire Hitachi for $4.3 Billion

Western Digital said Monday that it will acquire Hitachi Global Storage Technologies for a combination of cash and stock worth $4.3 billion, consolidating the first- and third-largest vendors in the market.

The acquisition, which must be approved by regulators, consolidates the market at a time where an increased need for storage in the cloud is still feeling pressured by the emergence of solid-state discs (SSDs), which use a rival technology, flash memory.

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 GST’s parent, 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.

WD Hitachi Western Digital To Acquire Hitachi for $4.3 Billion

“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, in a statement. “We believe this step will result in several key benefits—enhanced 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.”

WD, which has led the drive market for four consecutive quarters, topping rival Seagate, shipped 52.2 million drives during the end of the fourth quarter of 2010, IHS iSuppli said, versus 48.9 million for Seagate and 30.3 million units for HGST.

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WD to Buy Hitachi’s Drive Business for $4.3 Billion

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