Consolidation is afoot in the hard-drive business! This morning, Western Digital announced its imminent purchase of Hitachi Global Storage Technologies, Hitachi's mechanical storage subsidiary. The deal, which is expected to close in the third quarter, will see WD cough up $3.5 billion in cash and 25 million of its shares worth a combined $750 million—that's just under $4.3 billion altogether—for its former rival.
WD and Hitachi still need to get the nod from regulatory entities, but their boards of directors have already approved the deal. If the transaction completes without hitches, Hitachi will end up owning a cool 10% of WD shares, and Hitachi GST CEO Steve Milligan will become President of WD. (John Coyne will, however, remain WD's CEO.)
A story by the Wall Street Journal sheds some additional light on the deal. Reportedly, Hitachi is moving "away from consumer electronics toward large industrial projects," and the company will invest much of the cash from the sale in "infrastructure businesses such as railway and electric power."
As the WSJ points out, Hitachi GST consists of the remnants of IBM's hard-drive division, which was sold to Hitachi in 2003 in the aftermath of the 75GXP failure fiasco.