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Friday, 09 March 2012 15:41

WD completes Hitachi Global Storage acquisition

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Western Digital has announced that its acquisition of Viviti Technologies Ltd. (formerly Hitachi Global Storage Technologies) is complete and effective from March 8, 2012.

The deal is worth $US3.9B in cash with a further 25 million shares of Western Digital Corporation (WDC) common stock valued at approximately $0.9 billion. Hitachi Ltd now owns about 10 percent of WDC shares outstanding and has the right to designate two members to the board of directors of WD.

The new WD will operate with WD Technologies (WDT) and HGST as wholly owned subsidiaries. Aggregated revenues of the two companies in 2011 were $15 billion. John Coyne, CEO of WD, heads up the new office of the CEO, with Steve Milligan as president, Tim Leyden as chief operating officer and Wolfgang Nickl as chief financial officer.

In a statement Coyne said that "we expect to accomplish great things as we build the new WD to be the world's leading storage solutions provider with the industry's deepest technology capability, broadest product portfolio and best-in-class execution."

A recently updated HDD forecast by IDC predicts industry revenue growth at a compound annual growth rate of 8.6 percent per year from 2011 to 2016 signalling that the newly formed business expects to grow quickly.

The cash portion of the purchase price was financed by a $2.3 billion, five-year term loan, short-term financing under a $500 million revolving credit agreement and existing company cash balances. The company expects the transaction to be immediately accretive to earnings per share on a non-GAAP basis, excluding acquisition-related expenses, restructuring charges and amortization of intangibles. In addition, the company expects to maintain a positive net cash position.

Supplemental information regarding the HGST acquisition can be found on the WD website at http://www.wdc.com/wdproducts/library/company/investor/SupplementalInformation.pdf.

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