Western Digital would like nothing more than to finalize its proposed takeover of Hitachi's hard drive business, and to facilitate the process, WD agreed to transfer an asset package to rival Toshiba to ease concerns of regulatory agencies. The package includes equipment and intellectual property (IP) that will enable Toshiba to build and sell 3.5-inch hard drives for desktops, consumer electronics (things like DVRs), and near-line (business critical) applications.
Rather than pay cash for these assets, Toshiba in return has agreed to sign over a 2.5-inch HDD factory in Thailand that's been out of operation since severe flooding rolled through late last year.
The swap in HDD technology and assets between Western and Toshiba is largely a play to satisfy regulatory concerns in the European Union. In order to merge with Hitachi, WD had to divest part of its 3.5-inch HDD business, and this agreement does exactly that while also getting WD something in return.
WD expects its deal with Toshiba to close in March 2012, conditioned on WD's closing of its planned acquisition of Hitatci Global Storage Technologies (HGST).