Western Digital To Acquire Hitachi GST For $4.3 Billion

Western Digital said Monday it reached a deal to buy out Hitachi's hard drive manufacturing unit for $4.3 billion in cash and stock.

The deal calls for Western Digital to pay out $3.5 billion in cash for Hitachi Global Storage Technologies, and 25 million shares valued at $750 million as of the close of stock markets Friday. Western Digital said it will fund the acquisition through existing cash and $2.5 billion in debt.

Western Digital said it expects the deal to close in the third quarter, subject to regulatory approvals and other closing conditions. The company's shares were up 8.3%, to $32.50, in pre-market trading Monday.

For Hitachi, the move is seen as an extension of president Hiroaki Nakanishi's campaign to narrow his company's focus to several core areas in the industrial systems market while exiting peripheral businesses. For Western Digital, it's a chance to close the gap with hard disk drive market leader Seagate.

"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," said Western Digital president and CEO John Coyne, in a statement.

"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," said Coyne, who will be CEO over the combined companies.

Western Digital COO Tim Leyden will also remain in his current role, as will CFO Wolfgang Nickl. Hitachi GST president and CEO Steve Milligan will join the executive team at Western Digital, which will continue to operate from its Irvine, Calif. Headquarters.