Western Digital said it is to buy up Hitachi Global Storage Technologies (Hitachi GST) in a cash and stock transaction valued at approximately $4.3 billion.
The proposed combination will seek to entail the industry’s broadest product lineup as well as a rich technology portfolio.
Under the terms of the agreement, Western Digital will acquire Hitachi GST for $3.5 billion in cash and 25 million WD common shares valued at $750 million with Hitachi, Ltd. global electronics company, owning approximately ten per cent of WD shares.
WD plans to fund the transaction with a combination of existing cash and total debt of approximately $2.5 billion but expects the results to be accretive to its earnings per share on a non-GAAP basis.
The resulting company will retain the Western Digital name, and remain headquartered in Irvine, California with many of the same executive officers.
Hitachi GST was formed in 2003, when Hitachi bought IBM's storage business.
This latest union of two storage giants will, according to WD, create further value for customers, as well as stockholders and employees, resulting in benefits such as enhanced R&D capabilities, extended market coverage and economies of scale.
‘’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’’ states John Coyne, president and chief executive officer of WD.
The transaction which has been approved by the board of directors of each company is expected to close during the third quarter of 2011 and aims to show just why two heads are better than one.