Western Digital today announced that it has entered into a definitive agreement to acquire Hitachi Global Storage Technologies (GST), the disk drive arm of Hitachi Ltd., in a cash and stock transaction valued at about $4.3 billion.
Hitachi GST's business represents about 18% of total hard drive units shipped, according to market research firm iSuppli. Once combined, Western Digital and Hitachi GST will handily dominate Seagate in the market.
Under the agreement, Western Digital will pay $3.5 billion in cash and transfer 25 million shares of common stock valued at $750 million. The stock transaction means Hitachi Ltd. will own about 10% of Western Digital shares outstanding. Two representatives of Hitachi GST will be added to Western Digital's board of directors.
In a conference call this morning, Western Digital CEO John Coyne said he expects the deal to close in the September quarter.
"This is a unique development in the 55-year history of the hard drive industry in that it combines the resources of two of the world's most successful and most profitable hard drive companies," he said.
The resulting company will remain based in Western Digital's headquarters in Irvine, Calif.
Coyne will remain CEO. Steve Milligan, president and CEO of Hitachi GST, will join Western Digital as president, reporting to Coyne.