WD to acquire Hitachi GST
Western Digital (NYSE: WDC) announced today that it has acquired Hitachi Global Storage Technologies (Hitachi GST), a wholly-owned subsidiary of Hitachi, (NYSE: HIT), in a cash and stock transaction valued at approximately $4.3 billion. The proposed combination is expected to result in a customer-focused storage company, with significant operating scale, strong global talent and broader product lineup backed by a rich technology portfolio.
“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,” remarked John Coyne, president and CEO, WD.
Under the terms of the agreement, WD will acquire Hitachi GST for $3.5 billion in cash and 25 million WD common shares valued at $750 million, based on a WD closing stock price of $30.01 as of March 4th, 2011. Hitachi, will own approximately ten percent of WD shares outstanding after issuance of the shares and two representatives of Hitachi will be added to the WD board of directors at closing. The transaction has been approved by the board of directors of each company and is expected to close during the third calendar quarter of 2011, subject to customary closing conditions, including regulatory approvals. WD informed it plans to fund the transaction with a combination of existing cash and total debt of approximately $2.5 billion.
“Together we can provide customers worldwide with the industry’s most compelling and diverse set of products and services, from innovative personal storage to solid state drives for the enterprise,” commented ,” said Steve Milligan, president and CEO, Hitachi GST.
WD expects the transaction to be immediately accretive to its earnings per share on a non-GAAP basis, excluding acquisition-related expenses, restructuring charges and amortization of intangibles.
The resulting company will retain the WD name and remain headquartered in Irvine, California. John Coyne will remain CEO, WD, Tim Leyden COO and Wolfgang Nickl, CFO. Steve Milligan, president and CEO of Hitachi GST, will join WD at closing as president, reporting to John Coyne.
Commenting about the acquisition, Hiroaki Nakanishi, president, Hitachi, said, “It provides an opportunity for the new company to increase customer and shareholder value and expand into new markets. Additionally, it is important to us that WD shares common values with Hitachi GST to create a more global company that is well positioned to define a broader role in the evolving storage industry.”
WD’s exclusive financial adviser on the transaction is Bank of America Merrill Lynch; its lead legal adviser is O’Melveny & Myers. Goldman, Sachs & Co serves as financial adviser to Hitachi, and Hitachi GST. Legal advisers to Hitachi, and Hitachi GST are Morrison Foerster and Skadden, Arps, Slate, Meagher & Flom & Affiliates, respectively.
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