Western Digital has just secured conditional approval from the European Union's competition regulator to purchase Hitachi's hard disk drive business for a grand total of $4.3 billion. This was only made possible, however, after Western Digital agreed to sell several of its production operations.Western Digital, which just so happens to be the world's second largest competitor in the hard disk drive (HDD) sector, and Hitachi, which just so happens to be the third largest, unveiled the deal back in March. The deal itself is aimed at giving the United States company a competitive edge in developing next-generation information storage technology.
This decision by the European Commission confirmed a story published last week by Reuters. According to European Union Commissioner Joaquin Almunia in a recent statement, "The proposed divestiture will ensure that competition in the industry is fully restored before the merger is implemented."
Western Digital PDA did promise to sell essential production assets for the manufacturer of 3.5" disc drives, including a production plant, according to the Commission, which cited reduced competition in the sector after Seagate Technology bought Samsung Electronics' hard disk drive business recently. In addition to that the company agreed to transfer or license intellectual property rights to the business to be sold off. What's more is that Western Digital will also transfer staff and the supply of HDD components to the unit.
Western Digital is unable to complete the deal until it finds an appropriate buyer for the unit, which will then need to be approved by the regulator, according to the commission. If Western Digital is unable to find a suitable buyer, it stands to reason that this deal, although approved, will never actually come to fruition, which could be disappointing for both companies.
Source: Reuters - Western Digital cleared to buy Hitachi disk drive business
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