Western Digital Buys Hitachi Global Storage Technologies for $4.3 Billion

In a surprising and unforeseen turn of events, Western Digital has just announced that it has purchased Hitachi Global Storage Technologies in a cash and stock transaction valued at approximately $4.3 billion.

Under the terms of the agreement, Western Digital will acquire Hitachi GST for $3.5 billion in cash and 25 million WD common shares valued at $750 million (which translate into a 10% stake in WD).

According to WD's press release, 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.

The resulting company will retain the Western Digital name, as well as the company's headquarters in Irvine, California, and is going to be run by John Coyne (WD's current CEO) while Steve Milligan, president and chief executive officer of Hitachi GST, will join WD at closing as president.

In addition, two Hitachi representatives will be added to the WD board of directors at closing.

“The acquisition of Hitachi GST is a unique opportunity for WD to create further value for our customers, stockholders, employees, suppliers and the communities in which we operate,” said John Coyne, president and chief executive officer of WD.

“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.

“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,” concluded the company's CEO.

Although WD's acquisition of Hitachi GST is surprising, the company has been trying for quite some time now to consolidate its business as in Q4 of last year it attempted to takeover Seagate, its most important competitor in the HDD space.

The deal, however, was rejected by the Scotts Valley-based company, so Western Digital was forced to turn its attention towards other storage solutions manufacturers, such as Hitachi GST.