Toshiba buys Fujitsu HDD business

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Fujitsu said it has agreed to sell its hard disk drive (HDD) business to Toshiba for an undisclosed sum.

The sale comes as many electronics manufacturers restructure their businesses in the face of shrinking sales and the global economic slowdown.

The deal will see Fujitsu transfer its loss-making HDD-related businesses and functions to a new company that will be around 80 per cent owned by Toshiba during its first 2009 fiscal quarter, between April and June, of this year.

Fujitsu will retain a stake of less than 20 per cent in the new company for a period of time before Toshiba takes it on, including its production bases in Thailand and the Philippines, as a wholly owned subsidiary.

But it also warned that the plans to sell some of its HDD business to Toshiba, along with the sale of its HDD storage media business to Japanese engineering firm Showa Denko, would result in losses totalling 30 billion yen (£229 million).

The extraordinary losses from the liquidation of related facilities and other procedures also led the Japanese firm to revise its anticipated group net loss of 50 billion yen (£381 million) for fiscal year 2008, up from 20 billion yen (£152 million) in its January forecast.

Toshiba said the acquisition was designed to help it achieve its goal of growing its global market share to 20 per cent by 2015.

According to Japanese market researcher Techno Systems, Toshiba had the fourth largest hard drive business in the world last year, with a 8.7 per cent market share, while Fujitsu trailed in sixth with a 7.3 per cent share.

Financial analysts have estimated the transaction to be worth 30-40 billion yen (£229-305 million).

Toshiba also stated it plans aims to lower procurement costs of major hard-drive components, such as magnetic heads and disks, through its larger production capability.

It may also be hoping to exploit Fujitsu’s high-speed data read and write technology to potentially target more reliable, solid-state drive-based server systems through Fujitsu’s business server division.

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