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Western Digital gains as China loosens restrictions on Hitachi Global takeover

Chinese authorities would now allow WD, Hitachi to combine manufacturing, research operations.
Western Digital gains as China loosens restrictions on Hitachi Global takeover
Western Digital anticipates to save $400mln a year on its operating expenses.

Western Digital (NASDAQ:WDC) rose in morning trades after China loosened some restrictions on the disk-drive maker’s acquisition of its competitor Hitachi Global Storage Technologies Ltd.

Shares rose 1.8% to $80.93 at 9:44 a.m. in New York, paring this year’s loss to 27%.

China’s commerce ministry said on Monday that it would now allow the Irvine, California-based company and Hitachi Global Storage to combine their manufacturing and research operations, although they must maintain separate sales and branding for at least two years.

It said that Western Digital may reapply for combined sales and branding in two years.

The decision comes less than a month after Western Digital agreed to sell a 15% stake for $3.78bn to an arm of Chinese state-owned tech investment firm Tsinghua Unigroup Ltd. Zhao Weiguo.

Western Digital said it anticipates to save $400mln a year on its operating expenses, while reaping additional savings in the cost of goods sold. The company estimated it would take one to two years to achieve most of these savings.

"The decision announced today positions us for continued growth and long-term value creation," Western Digital CEO Steve Milligan said in a statement on Monday.

“HGST and WD are an exceptional combination, and together, we will set the pace for innovation in this dynamic and evolving industry."



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