Western Digital to buy enterprise SSD maker sTec for $340M

By on June 24, 2013, 12:30 PM

Western Digital has announced it agreed to pay $6.85 a share, or $340 million in cash, to acquire a California-based company called sTec that specializes in making enterprise solid state drives. The selling price represents a 91 percent premium over the latter’s closing price on Friday, and is a tremendous exit for the company which had to deal with an insider trading scandal as well as losing half of its value over the past year.

Stec's biggest shareholder, Balch Hill Capital, started pushing the money-losing company to consider a sale six month ago and apparently Seagate was approached as a possible suitor as well.

The deal will augment Western Digital’s existing solid state storage capabilities by complementing last year’s purchase of HGST, which operates as a wholly owned subsidiaries with separate brands and products. Steve Milligan, WD’s President and Chief Executive says he expects enterprise SSDs to play an increasingly strategic role in the future of the company. "This acquisition is one more building block in our strategy to capitalize on the dramatic changes within the storage industry by investing in SSDs and other high-growth storage products."

The sale is expected to close in the third or fourth quarter of 2013 pending all the regulatory approvals.

Western Digital has been less aggressive on the consumer side of things, releasing the SiliconEdge back in 2010 and apparently getting cold feet afterwards. Nowadays the company seems to be focusing more on SSHDs (solid-state hybrid drives) for this market with a line of “Black” branded storage products.

Meanwhile it’s longtime competitor, Seagate, went all in last month with a full range of NAND-based products that includes everything from 2.5" drives for general consumers to PCIe-based accelerators designed for servers.




User Comments: 6

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JC713 JC713 said:

Great! The HDD business is sliding. Good move.

cliffordcooley cliffordcooley, TechSpot Paladin, said:

It's about time WD put out a SSD. Maybe they are getting closer to that milestone with this purchase.

JC713 JC713 said:

It's about time WD put out a SSD. Maybe they are getting closer to that milestone with this purchase.

Too bad their name is not affiliated with quality SSDs as it is with HDDs. It is never too late, but I think it will take time to get the name out and the quality right.

Trillionsin Trillionsin said:

It's about time WD put out a SSD. Maybe they are getting closer to that milestone with this purchase.

Too bad their name is not affiliated with quality SSDs as it is with HDDs. It is never too late, but I think it will take time to get the name out and the quality right.

their name is already out... besides, how many have heard of sTec? Well, maybe I'm the only one who hasnt.... but either way, I wonder if WD is going to keep them Enterprise level?

cliffordcooley cliffordcooley, TechSpot Paladin, said:

besides, how many have heard of sTec? Well, maybe I'm the only one who hasnt....
Your not alone.

JC713 JC713 said:

their name is already out... besides, how many have heard of sTec? Well, maybe I'm the only one who hasnt.... but either way, I wonder if WD is going to keep them Enterprise level?

I am talking consumer SSDs. If WD were to transition to consumer SSDs, there is too much competition to be successful. They have to get into the SSD business as soon as possible. I think WD will stay with thin HDDs and hybrid HDDs for the next few years.

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