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Western Digital to aquire Hitachi Global Storage

Western Digital to aquire Hitachi Global Storage

Western Digital is well known among enthusiasts for its Raptor and VelociRaptor ranges.

Western Digital this morning announced plans to purchase Hitachi’s hard disk wing - Hitachi Global Storage - in its entirety, integrating the company into its existing operation.

The deal is set to cost Western Digital the princely sum of $4.3 billion, which will be made up of $3.5 billion in cash and around $750 million in Western Digital shares.

The agreement will create one of the largest hard disk manufacturers in the world, and Western Digital describes the move as ‘a unique opportunity to create further value for our customers, stockholders, employees and suppliers.

Those at Western Digital HQ aren’t likely to crack open the Champagne just yet, though, as the deal is still yet to gain regulatory approval, which could be a hurdle for a deal as large as this.

Western Digital has to borrow heavily in order to finance the purchase, with a loan of $2.5 billion helping to pay for the cash portion of the transaction. The company is remaining bullish about the strategic value of the deal, though, claiming that the acquisition should start immediately adding to its bottom line and earnings per share.

The deal is likely to result in Hitachi hard disks completely disappearing from the shelves, but the company will still have a finger in the hard disk market due to the 10 per cent stake in Western Digital it’s picking up as a part of the deal. The deal will also see Hitachi placing two representatives on the Western Digital board of directors.

This move will effectively only leave four independent hard disk manufacturers in the industry, as Hitachi GST was originally IBM's hard disk division before it was sold to Hitachi, and Seagate bought out Maxtor in 2006. Not only that, but Toshiba also bought Fujitsu's hard drive division in 2009. This leaves us with just Western Digital, Seagate, Samsung and Toshiba.

Is consolidation in the hard disk market a sign that SSDs are starting to take over, or just a sign of capitalism at work? Let us know your thoughts in the forums.

24 Comments

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mi1ez 8th March 2011, 16:57 Quote
I love it when people say things like that - "$3.5 billion dollars in cash". I just imagine them actually turning up with that amount in hard currency!
Valinor 8th March 2011, 17:30 Quote
They should measure cash in number of briefcases stuffed with £20 notes.
metarinka 8th March 2011, 17:48 Quote
most analysts tend to agree this is good for the market. As market shrink, like mechanical storage interests usually consolidate. I don't think the HDD market was suffering from under diversity.

I've used Seagate WD and hitachi drives, so I'm happy. Mechanical storage is probably in it's last decade of being dominant anyways.
wuyanxu 8th March 2011, 17:52 Quote
so what does Hitachi have, that WD wants? the enterprise market?

companies don't just go randomly purchase competitors.
Tech NoOb 8th March 2011, 18:39 Quote
Quote:
Originally Posted by wuyanxu
so what does Hitachi have, that WD wants? the enterprise market?

companies don't just go randomly purchase competitors.

- Their billions of dollars worth of market share?
- Purchasing a competitor means one less competitor to worry about.
- Because they can
andrew8200m 8th March 2011, 18:48 Quote
SSDs are taking over.
flibblesan 8th March 2011, 18:53 Quote
No more DeathStars!
RichCreedy 8th March 2011, 22:21 Quote
Quote:
Originally Posted by flibblesan
No more DeathStars!

thats a good thing surely, lol
Picarro 8th March 2011, 22:28 Quote
Quote:
Originally Posted by flibblesan
No more DeathStars!

You have got it all wrong. We willll just get Velociraptor DeathStars - now guaranteed to fail, fast!
Omnituens 9th March 2011, 00:23 Quote
Quote:
Originally Posted by Picarro
You have got it all wrong. We willll just get Velociraptor DeathStars - now guaranteed to fail, fast!

Question is:

HourBeforeDawn 9th March 2011, 00:41 Quote
good for WD, horrible for us Consumers, less competition is never a good thing >.<
HourBeforeDawn 9th March 2011, 00:43 Quote
Quote:
Originally Posted by wuyanxu
so what does Hitachi have, that WD wants? the enterprise market?

companies don't just go randomly purchase competitors.

Tech, tech, and more tech. Like they are the first to engineer 1tb platters and so on.
dark_avenger 9th March 2011, 02:16 Quote
This may also have something to do with it, why develop your own tech when you can just buy a company that already did the research for you?
Bindibadgi 9th March 2011, 02:34 Quote
Quote:
Originally Posted by dark_avenger
This may also have something to do with it, why develop your own tech when you can just buy a company that already did the research for you?

This.

Hitachi has some great tech innovations but not the greatest manufacturing or brand. WD on the other hand is the opposite.

I bet Seagate are shitting themselves, esp. given its Hybrid drives are causing them so many headaches.
ZERO <ibis> 9th March 2011, 02:55 Quote
I have been buying and using deskstars for 10 years with only 1 (the 75gb deathstart) failing and 1 (2tb model) coming doa. The only other mechanical drives I have had was WD raptors and segate 15k sas drives. One of my first generation raptor drives is still alive and well but I hope that I still see the long life and performance I have always gotten from the deskstar line.
sotu1 9th March 2011, 10:13 Quote
Quote:
Originally Posted by mi1ez
I love it when people say things like that - "$3.5 billion dollars in cash". I just imagine them actually turning up with that amount in hard currency!

Reminds me of that bit in Dodgeball where he opens the suitcase with a million dollars in it, and it's actually this tiny wad of cash!
rinseout 9th March 2011, 11:17 Quote
Quote:
Originally Posted by Bindibadgi


Hitachi has some great tech innovations but not the greatest manufacturing or brand. WD on the other hand is the opposite.

Most of the hdd failures I've had at work in the last year have been Western dig.

One of the labs we refitted last summer had 200 PCs in it. 6 WDC drives failed within a week, which is a relatively high percentage imo.
Apparently since they moved their factory to thailand a few years ago the ethos has been that it's cheaper to replace a faulty hdd than to build decent ones in the first place.

Good brand but rapidly going downhill in my estimation.
NethLyn 9th March 2011, 14:13 Quote
It's a good bit of business but it's a shame that a takeover will guarantee WD a loss next year, dunno what it is about big acquisitions that drive profit into the ground. I just happened to pick up a Caviar Blue for my other PC the day before this story broke but I just hope they get back some focus because that colour coding crap got on my nerves and I just bought the bargain Samsung last Christmas instead.

@ Rinseout - what "colour" were those failing WD drives? Took me ages to figure out that Blue stood for "the same drive you bought before we came up with this stupid new name".
Keith_UK 9th March 2011, 14:38 Quote
If they do actually aquire Hitachi's hard disk division I really hope its just to buy out the competition and not to put anything from the Hitachi HDDs into their products. Just that I know a friend whos had bad experiences with Hitachi HDDs a few years ago.
But saying that I did have a problem with my 500GB WD Caviar green HDD after only 4 months use started to fail with bad sectors developing and not passing short HDD tests so sent it back to Scan to recieve a new one. I have backed up onto a spare Seagate just in case something happens to this new one. I am only using it as a mass storage not for running windows or games. Fingers crossed this one doesnt fail on me...
Hakuren 9th March 2011, 15:59 Quote
It will be a good deal.

WD is - in general - better suited for desktops. Hitachi is better in RAID systems.

What WD should do is to drop some products from it desktop line. All Green and Blue disks are relatively useless. The only WD HDDs I buy are Blacks. Not a single faulty Black so far. Same goes for every Hitachi drive I ever owned (including many during UW/LVD -> SCSI times).

Burn Seagate. Most worthless SATA disks I ever used.
Unicorn 9th March 2011, 16:07 Quote
About bloody time... I was beginning to think this was never going to happen.

Believe me, if the head honcho's at WD are calling the shots at Hitachi in the future, there will be no rubbish technology going into drives from either company. As Bindi said, WD have always had the quality. They're not going to sacrifice that just because of a takeover.
rinseout 9th March 2011, 16:38 Quote
@NethLyn - All blues mate as supplied by Dell...
MrTeal 10th March 2011, 00:20 Quote
"All Green and Blue disks are relatively useless." ...For you, for storage the Greens are perfectly fine.
Paulg1971 10th March 2011, 13:55 Quote
Quote:
Originally Posted by Tech NoOb
Quote:
Originally Posted by wuyanxu
so what does Hitachi have, that WD wants? the enterprise market?

companies don't just go randomly purchase competitors.

- Their billions of dollars worth of market share?
- Purchasing a competitor means one less competitor to worry about.
- Because they can

But can they,they have to take $2.5 billion loan to do the deal.I think if a company can't buy it with its own money it should'nt be allowed to do it.
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