Western Digital to buy Hitachi GST for $4.3 billion

By on March 7, 2011, 6:52 AM
Western Digital has just announced an agreement to acquire Hitachi Global Storage Technologies in a cash and stock deal valued at about $4.3 billion. Under the terms of the agreement, Japan's Hitachi will sell its wholly owned hard disk drive business for $3.5 billion in cash and 25 million Western Digital common shares valued at $750 million, based on a stock price of $30.01. Hitachi will own about 10% of Western Digital's shares after the deal closes and two representatives of the company will be added to Western Digital's board.

The transaction is expected to close in the third quarter of the year, pending regulatory approval, and should help Western Digital strengthen its leading position in the market after taking the crown from Seagate. In 2010, Western Digital represented 31.4% of the hard drive market, nearly two percentage points ahead of Seagate's share of 29.6%. Hitachi GST took third place in overall shipments with 16.4%, ahead of Toshiba/Fujitsu at 12.6% and Samsung at 9.2%.

Besides the acquisition plans Western Digital also recently reveled its interest in developing a hybrid drive combining spinning disk and solid-state storage, along the lines of Seagate's Momentus XT. The company noted that hybrid hard drives still need better support from operating systems to reach their full potential, and that such a drive could show up in gaming systems because of the better performance, as well as enterprise and mobile environments.

User Comments: 8

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madboyv1, TechSpot Paladin, said:

Woah, I kind of figured Samsung or Toshiba would pick up Hitatchi.

Rick Rick, TechSpot Staff, said:

Over the course of 10 years, we have seen the number of manufactures drop significantly.

Quantum was gobbled up by Maxtor

Maxtor was gobbled up by Seagate

IBM's drive division was gobbled up by Hitatchi

Fujitsu was gobbled up by Toshiba

Excelstor is gone (not that they amounted to much anyhow)

Who's next?

Guest said:

not a bad profit considering IBM sold it's disk business to Hitach in 2002 for $2.05 Billion.

dividebyzero dividebyzero, trainee n00b, said:

The $US 2.05bn was the initial investment for 70% of IBM's hard drive division. It does not represent the total acquisition price.

You might also consider that Hitachi got the hdd business at a knockdown price considering IBM's ongoing (at the time) sales, PR and legal trainwreck -the 75GXP, colloquially known as the IBM Deathstar.

Since Hitachi GST is already a player in the SSD market -something lacking in WD's portfolio I would think the $3.5bn outlay represented good business.

Lokalaskurar Lokalaskurar said:

I never imagined Western Digital as a candidate for Hitachi, I always though of a more local affiar - like Toshiba, FDX or even Fujitsu acquiring Hitachi. Frankly, I personally thought Hitachi would stand on their own legs for quite some time more.

Rick said:

Excelstor is gone (not that they amounted to much anyhow)

Yeah, what happened with those, anyway?

EXCellR8 EXCellR8, The Conservative, said:

good riddance desk star and travel star hard drives... you will NOT be missed.


I can't decide if this is a good thing or a bad thing. It's bad because they are essentially removing a competitor from the market, giving the consumer less choices. But what are you gonna do?

fpsgamerJR62 said:

I used IBM HDDs before switching to Western Digital because of the former's limited availability in my country. I've had zero problems with either brand. I'm currently using WD Caviar Black and I'm happy that WD bought Hitachi's HDD business. Now, I know I'll be buying my hard disks from only one company.

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