Western Digital today announced the acquisition of Global Storage Technologies (GST), a wholly-owned subsidiary of Hitachi Ltd, for $4.3 billion in a cash-and-stock transaction.
The acquisition 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.
''The acquisition of Hitachi GST is a unique opportunity for Western Digital 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 Western Digital. ''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.''
Western Digital will acquire Hitachi GST for $3.5 billion in cash and 25 million of its shares valued at $750 million, based on a closing stock price of $30.01 as of 4 March. Hitachi will own approximately 10 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 boards of both companies 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.
The merged entity will retain the Western Digital name and remain headquartered in Irvine, California.
''This brings together two industry leaders with consistent track records of strong execution and industry out-performance,'' 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.''
According to Hiroaki Nakanishi, president, Hitachi Ltd. ''as the former CEO of Hitachi GST, I always believed in its potential to become a larger and more agile company. This is a strategic combination of two industry leaders, both growing and profitable.''
Western Digital, one of the storage industry's pioneers and long-time leaders, provides products and services for people and organisations that collect, manage and use digital information. The company designs and produces reliable, high-performance hard drives and solid state drives that keep users' data accessible and secure from loss.
Western Digital was founded in 1970. The company's storage products are marketed to leading OEMs, systems manufacturers, selected resellers and retailers.