Tuesday, March 8, 2011

WDC Rally

Western Digital has experienced nearly a 20% rally over the last two days. This has been a result of the company’s recent announcement of the definite acquisition of Hitachi Global Storage Technologies (Hitachi GST). Hitachi GST is a wholly-owned subsidiary of Hitachi Ltd. The acquisition will be executed using $3.5 billion cash and 25 million Western Digital common shares resulting in a total value of approximately $4.3 billion. Hitachi will own approximately 10% of WDC shares outstanding and two representative of Hitachi will be added to Western Digital’s board of directors.

The acquisition will result in a customer-focused storage facility that has a large operating scale, excellent talent, and the industry’s broadest product line. WDC has stated the acquisition will be immediately accretive, meaning WDC should enjoy increased EPS in coming quarters.

UASBIG Technology analysts are excited to see this acquisition take place. The sector is confident the company’s acquisition of Hitachi GST will strengthen the company’s competitive advantage and financial position in the industry.


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