Tsinghua Holdings to buy 15% stake in US data storage firm Western Digital for $3.78 bn
01 Oct 2015
Unisplendour Corp Ltd (Unis), a unit of China's state-backed Tsinghua Holdings Co Ltd yesterday struck a friendly deal to buy a 15-per cent stake in US data storage firm Western Digital Corp for $3.78 billion.
Under the terms of the investment, Unis will buy newly issued Western Digital common stock at $92.50 per share, a premium of about 33 per cent to the company's Tuesday closing price.
Immediately following the closing, Unis will hold approximately 15-per cent stake in Western Digital will have the right to nominate one representative to the Western Digital board of directors subject to a five-year position standstill and voting restrictions.
The board representative right will be terminated if Unis's ownership falls below 10 per cent. Unis has agreed to a five-year lock-up on its shares.
Western Digital said that it will use the proceeds from the investment towards strengthening its balance sheet, and pursuing long-term strategic growth initiatives.
''The equity investment by Unis will help facilitate our growth as we look to capitalise on the many opportunities and changes within the global storage industry,'' said Steve Milligan, president and CEO of Western Digital.
''We are excited to establish a relationship with Western Digital, a leading company in the storage industry with a capable and talented management team and workforce. We believe this long-term investment will serve as a constructive collaboration model for Chinese and US companies to work together for success,'' said Weiguo Zhao, chairman of Tsinghua Unigroup and Unisplendour Corp.
Founded in 1970, California-based Western Digital is a developer and manufacturer of data storage solutions. Its products are marketed under the HGST, WD and G-Technology brands to OEMs, distributors, resellers, cloud infrastructure providers and consumers.
Western Digital employs around 76,500 people and posted revenue of $14.6 billion in its fiscal year ended 3 July.
This year Tsinghua Unigroup was reported to be preparing a $23-billion takeover offer for US semiconductor maker Micron Technology, but that offer was not tabled over fears that the US Committee on Foreign Investment would have rejected the transaction, partly over concerns about national security.
