Western Digital (NYSE:WDC) said today it has agreed to buy Japanese Hitachi's (NYSE:HIT) (TSE:6501) data storage products unit in a cash and stock deal valued at $4.3 billion.
"We believe this step will result in several key benefits—enhanced R&D capabilities, innovation and expansion of a rich product portfolio, comprehensive market coverage and scale that will enhance our cost structure and ability to compete in a dynamic marketplace," said Western Digital president and CEO John Coyne.
Under the terms of the deal, Western Digital will acquire Hitachi Global Storage Technologies (GST) for $3.5 billion in cash and 25 million Western Digital shares valued at $750 million, based on the company's Friday closing price.
After the deal is complete, Hitachi will own roughly 10% of Western Digital, and two representatives of the company will be added to Western Digital's board.
The enlarged entity will retain the Western Digital name and will remain based in Irvine, California with Coyne as CEO. President and CEO of Hitachi's GST unit, Steve Milligan, will come on as president of Western Digital.
The transaction, which has already been approved by both boards, is expected to close in the third quarter this year. Western Digital said it expects the acquisition to be immediately accretive to its earnings per share on an adjusted basis.
Western Digital plans to fund the purchase with a combination of cash on hand, and total debt of approximately $2.5 billion.