Western Digital (WD), the global storage giant headed by Irishman John Coyne, is acquiring Hitachi Global Storage Technologies for US$4.3bn in a cash and stock transaction.
The companies say 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 US$3.5bn in cash and 25m WD common shares valued at US$750m, based on a WD closing stock price of US$30.01 as of 4 March, 2011.
Hitachi, Ltd. will own about 10pc 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.
Global storage giant
WD plans to fund the transaction with a combination of existing cash and total debt of about US$2.5bn.
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,” Coyne explained.
“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,” Coyne said.
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,” Nakanishi said.