Western Digital buys Hitachi GST for $4.3 billion

western-digital-logoHard drive giant Western Digital announced Monday its newly-approved acquisition of Hitachi Global Storage Technologies (GST) for the equivalent of $4.3 billion, reports Engadget. The deal, says Western Digital in a press release, “will result in a customer-focused storage company, with significant operating scale, strong global talent and the industry’s broadest product lineup backed by a rich technology portfolio.”

Under the terms of the acquisition, Western Digital — which shipped the world’s first 1 TB 2.5-inch hard drive in 2009 — will pay $3.5 billion in cash, as well as dole out shares worth about $750 million to Hitachi GST’s parent company, Hitachi Ltd. Hitachi GST President and chief executive Steve Milligan will be named the new president of Western Digital. And all Hitachi GST operations will now fall under the Western Digital name.

“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 F. Coyne in a statement. “The skills and contributions of both workforces were key considerations in assessing this compelling opportunity.”

In an attempt to combat a drop in revenue, Hitachi Ltd., which makes wide variety of products from nuclear power plants to toilets, has been cutting jobs, closing plants and shedding segments of its business that are losing money.

By bringing the Hitachi GST operation under its umbrella, Western Digital has put itself in direct competition with Seagate, its top American rival, as well as Dell, to become a top 5 player in the digital storage market. In addition, the Hitachi GST acquisition will strengthen Western Digital’s ability to weather the boom and bust storms of the storage industry.

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