Summary
Western Digital Corporation (WDC) has announced a significant strategic move through an Agreement and Plan of Merger with Komag, Incorporated, a key media supplier. WDC, via its subsidiary State M Corporation, will commence a cash tender offer to acquire all outstanding shares of Komag at $32.25 per share. This acquisition is expected to be completed in the third calendar quarter of 2007 and aims to integrate Komag's operations, thereby strengthening WDC's supply chain and potentially enhancing its market position in the hard drive industry. The transaction has received unanimous approval from the boards of directors of both companies.
Key Highlights
- 1Western Digital Corporation (WDC) is acquiring Komag, Incorporated, a material supplier of media, through a cash tender offer.
- 2The offer price is $32.25 per share for all outstanding Komag common stock.
- 3The acquisition is structured as a tender offer followed by a merger, making Komag a wholly owned subsidiary of WDC.
- 4The transaction is expected to close in the third calendar quarter of 2007.
- 5The boards of directors of both WDC and Komag have unanimously approved the merger agreement.
- 6WDC has also terminated its existing $125.0 million senior credit facility with GE Capital and Bank of America, with no outstanding borrowings and a minor letter of credit being restructured.
Frequently Asked Questions
The primary purpose of acquiring Komag, a material supplier of media, is to enhance Western Digital's supply chain control and potentially improve its competitive position within the hard drive industry by integrating a key component supplier.
Western Digital is offering $32.25 per share in cash for all outstanding Komag common stock. The transaction will be completed through a cash tender offer, followed by a second-step merger where Komag will become a wholly owned subsidiary of Western Digital.
The tender offer is conditioned on several factors, including the tender of a majority of Komag's outstanding shares (considering options and vested rights), and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The merger is subject to these conditions and other customary closing requirements.
Western Digital terminated its $125.0 million senior credit facility concurrently with obtaining debt financing commitment. Since there were no outstanding borrowings and only a small letter of credit, this termination suggests a refinancing or a change in financing strategy, likely unrelated to the Komag acquisition itself but indicative of financial restructuring.