Western Digital completes Hitachi deal

News 9 Mar, 2012

The acquisition of Hitachi’s Global Storage Technologies completes for a mixture of cash and shares.

Western Digital today confirmed the acquisition of Hitachi Global Storage Technologies (GST), boosting its already significant share of the storage market and giving it a stronger Hard Disk Drive (HDD) unit.

The deal sees Hitachi pocket $3.9 billion (£2.5 billion) in cash, along with 25 million shares in Western Digital, valued at just under $1 billion. The shares equal 10 per cent of the company and gives Hitachi the right to appoint two of its own members to Western Digital’s board of directors.

The completion of this acquisition is a truly momentous event in the 42-year history of our company

There were question marks as to whether the deal, first proposed in March 2011, would ever go through regulatory bodies had to see whether it was competitive to give Western Digital such a large portion of the HDD market and if it would push its main rival Seagate out of the business.

After a year of debate, the deal has finally received approval and Hitachi GST will run as a separate, but wholly-owned subsidiary, of Western Digital.

John Coyne, chief executive (CEO) of Western Digital, will take on the CEO role at Hitachi GST, whereas Steve Milligan, Hitachi GST’s former CEO, will take on the role of president.

Both the chief operating officer (COO) and chief financial officer (CFO) roles will be kept by Western Digital staff.

“The completion of this acquisition is a truly momentous event in the 42-year history of our company," said Coyne.

"With ownership of two successful companies and the best talent available in the industry, we expect to accomplish great things as we build the new Western Digital to be the world's leading storage solutions provider with the industry's deepest technology capability, broadest product portfolio and best-in-class execution.”

But what about Seagate? It had always been the larger of the two firms but will it continue to be competitive in the HDD market? Claus Egge, director of his own analyst firm, believes so.

“Seagate has been very strong for many years,” he told IT Pro. “The fact that Western Digital has bought Hitachi GST and wanted to add enterprise drives to its portfolio won’t [change] that.

“They have their own sales chains and have their markets. Both companies will continue.”