Western Digital announced it's acquiring Hitachi's Global Storage Technologies business for $4.3 billion.
The deal will see Western Digital bring aboard Hitachi's global storage business, which is a wholly-owned subsidiary of Hitachi Inc., for $3.5 billion in cash and 25 million WD common shares valued at $750 million. This is based on Western Digital's closing stock price of $30.01 on March 4. Hitachi 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 Western Digital board of directors at closing.
The new combination company will retain the Western Digital name and be headquartered in Irvine, Calif. which is where Western Digital is located.
The acquisition of Hitachi global storage technologies is a unique opportunity for Western Digital to create further value for our customers, stockholders, employees, suppliers and the communities in which we operate, John Coyne, president and chief executive officer of Western Digital, said 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.
Coyne will remain chief executive officer of Western Digital, Tim Leyden chief operating officer and Wolfgang Nickl chief financial officer. Steve Milligan, president and chief executive officer of Hitachi global storage technologies, will join Western Digital at closing as president, reporting to John Coyne.
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. It's subject to regulatory approvals and other usual closing conditions. WD plans to fund the transaction with a combination of existing cash and debt of approximately $2.5 billion.
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, in a statement. 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.
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