Western Digital, the world's second largest maker of hard drives, announced on Monday it has entered into a definitive agreement to purchase Hitachi's HDD division. Under terms of the deal, Western Digital will fork over $3.5 billion in cash and 25 million WD common shares valued at $750 million to purchase its rival. Hitachi will then own about 10 percent of Western Digital, as well as add two members to WD's board of directors.
"The acquisition of Hitachi GST is a unique opportunity for WD 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 WD. "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. The skills and contributions of both workforces were key considerations in assessing this compelling opportunity. We will be relying on the proven integration capabilities of both companies to assure the ongoing satisfaction of our customers and to bring this combination to successful fruition."
Hard drive prices have been falling steadily in recent years, particularly as tablets and other mobile devices that rely on Flash storage rise in popularity. Nevertheless, Western Digital announced HDD shipments of 52.2 million for its second fiscal quarter ended December 31, 2010, up from 49.5 million one year ago.
This acquisition gives Western Digital a chance catch up to market leader Seagate, which WD also tried to buy late last year.