Western Digital to buy Komag
Western Digital Corp. (NYSE: WDC) announced late Thursday that it agreed to acquire rival Komag Inc. (NASDAQ: KOMG) for about $1 billion in cash.
Lake Forest Calif.-based Western Digital said late Thursday will pay $32.25 per share of for Komag Inc., representing a 9 percent premium to its Thursday closing price.
The addition of Komag, based in San Jose, California, helps Western Digital fill gaps in its manufacturing. Komag develops media products which hard disks store magnetic data on. Western Digital already owns the products used to write data.
This acquisition will enable WD to optimize synergies through the integration of heads and media, secure our long-term supply of media, and sharpen our ability to deliver high quality, highly reliable and cost-effective products to our customers, said John Coyne, WD President and Chief Executive Officer.
In 2003, Western Digital bought the bankrupt Read-Rite Corp. for about $95.4 million in cash, helping boost its recording head production.
To pay for Komag, including the expected retirement of Komag's convertible notes due in 2014, Western Digital will fund a combination of the companyâ€™s cash and proceeds from a senior secured term loan of up to $1.25 billion.
The transaction, structured as a tender offer, has been approved by both boards, according to the statement. The deal is expected to close in the third calendar quarter.
Shares of Komag rose $2.31, or 7.81 percent, to reach $31.89 at the end of regular trading hours on the Nasdaq Stock Market. Western Digital shares fell 18 cents, or 0.92 percent to close at $19.35 on the New York Stock Exchange.