updated 08:15 am EST, Mon March 7, 2011
WD buys Hitachi storage division
Western Digital said on Monday that it was buying Hitachi Global Storage Technologies for the equivalent of $4.3 billion. The move includes a combination of $3.5 billion in cash as well as shares worth about $750 million. The deal will see the WD name remain but see Hitachi GST's CEO Steve Milligan join WD as president.
John Coyne, Western Digital CEO, argued that the move was chiefly for scale. The two would form a larger competitor and would have the advantage of better research and a wider range of products. Hitachi has focused on fields such as drives for set-top boxes as well as a greater focus on mobile hard drives.
The play is an attempt to hedge Western Digital's position and compete against an increasingly tougher market. Hitachi has had reduced influence, while Western Digital has been in a long-running battle with its fellow American rival Seagate. Absorbing Hitachi would give the combined company greater clout.