Western Digital to Acquire Hitachi Global Storage Technologies
Data storage specialist Western Digital and Hitachi Ltd. announced they have
entered into a definitive agreement whereby Western Digital will acquire
Hitachi Global Storage Technologies, a wholly owned subsidiary of Hitachi,
in a cash and stock transaction valued at approximately $4.3 billion.
Under the terms of the agreement, Western Digital will acquire Hitachi GST for $3.5 billion in cash and 25 million Western Digital common shares valued at $750 million, based on a Western Digital closing stock price of $30.01 as of March 4. Hitachi will own approximately 10 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 transaction has been approved by the board of directors of each company and is expected to close during the third calendar quarter of 2011, subject to customary closing conditions, including regulatory approvals. Western Digital said it plans to fund the transaction with a combination of existing cash and total debt of approximately $2.5 billion.
The resulting company will retain the Western Digital name and remain headquartered in Irvine, Calif. John 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 GST, will join Western Digital at closing as president, reporting to Coyne.
"The acquisition of Hitachi GST is a unique opportunity for Western Digital to create further value for our customers, stockholders, employees, suppliers and the communities in which we operate," said Coyne. "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."
He said the skills and contributions of both workforces were key considerations in assessing the 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," he said.