Western Digital buys Hitachi Storage for $4.3B

Storage company Western Digital has just entered into an agreement to buy competing company Hitachi Global Storage Technologies for $4.3 billion in cash and stocks.

The acquisition will increase the combined market share of WD in the
storage business. We don’t know yet if the combined market share of both
will match that of Seagate. In 2005, a similar merger also happened
when Seagate bought Maxtor for an estimated $1.9 billion.

Full copy of press release below.
<blockquote>IRVINE, Calif. and SAN JOSE, Calif. – Mar. 7, 2011 –
Western Digital (NYSE: WDC) and Hitachi, Ltd. (NYSE: HIT /
TSE:6501)announced today that they have entered into a definitive
agreement whereby WD will acquire Hitachi Global Storage Technologies
(Hitachi GST), a wholly-owned subsidiary of Hitachi, Ltd., in a cash and
stock transaction valued at approximately $4.3 billion. The proposed
combination will result in a customer-focused storage company, with
significant operating scale, strong global talent and the industry’s
broadest product lineup backed by a rich technology portfolio.



Under the terms of the agreement, WD will acquire Hitachi GST
for $3.5 billion in cash and 25 million WD common shares valued at
$750 million, based on a WD closing stock price of $30.01 as of March 4,
2011. Hitachi, Ltd. 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 WD 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. WD plans to fund the transaction with a combination of
existing cash and total debt of approximately $2.5 billion.



WD expects the transaction to be immediately accretive to its
earnings per share on a non-GAAP basis, excluding acquisition-related
expenses, restructuring charges and amortization of intangibles.
The resulting company will retain the Western Digital name and
remain headquartered in Irvine, California. John Coyne will remain chief
executive officer of WD, Tim Leyden chief operating officer and
Wolfgang Nickl chief financial officer. Steve Milligan, president and
chief executive officer of Hitachi GST, will join WD at closing as
president, reporting to John Coyne.

“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 benefits3Ž4enhanced 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.”

“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. “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.”

Hiroaki Nakanishi, president, Hitachi, Ltd. said, “As the former
CEO of Hitachi GST, I always believed in the potential of Hitachi GST
to become a larger and more agile company. This is a strategic
combination of two industry leaders, both growing and profitable. It
provides an opportunity for the new company to increase customer and
shareholder value and expand into new markets. Additionally, it is
important to us that WD shares common values with Hitachi GST to create a
more global company that is well positioned to define a broader role in
the evolving storage industry.”
</blockquote>