8-KLeadership ChangesMaterial AgreementsSecurities & Listing+2

WESTERN DIGITAL CORP 8-K Report, Material Agreement (Mar 7, 2011)

Filed March 7, 2011For Securities:WDC

Summary

Western Digital Corporation (WDC) announced a significant strategic move on March 7, 2011, by entering into a Stock Purchase Agreement to acquire Hitachi Global Storage Technologies Holdings Pte. Ltd. (HGST) from Hitachi, Ltd. The transaction is valued at approximately $3.5 billion in cash plus 25 million shares of WDC common stock, subject to adjustments. This acquisition is poised to substantially expand WDC's market presence and product portfolio in the hard disk drive industry. The company has also secured a commitment for a $2.5 billion senior secured credit facility to help finance the cash portion of the acquisition. To facilitate the integration and ongoing relationship, several ancillary agreements have been put in place, including an Investor Rights Agreement, License Agreement, Customer Agreement, Transition Services Agreement, and Non-Competition Agreement. The closing of the transaction is anticipated in the third calendar quarter of 2011, pending regulatory approvals and other customary closing conditions.

Key Highlights

  • 1WDC to acquire Hitachi Global Storage Technologies (HGST) for approximately $3.5 billion in cash and 25 million shares of WDC stock.
  • 2The acquisition is expected to close in the third calendar quarter of 2011, subject to regulatory approvals and customary conditions.
  • 3WDC has secured a $2.5 billion senior secured credit facility to finance part of the cash consideration.
  • 4The transaction involves several ancillary agreements to manage the post-acquisition relationship, including intellectual property licenses, customer arrangements, and transition services.
  • 5Hitachi, Ltd. will receive board nomination rights as part of the Investor Rights Agreement, subject to certain conditions.
  • 6The leadership team is being restructured, with John Coyne remaining CEO, Stephen Milligan appointed President (formerly CEO of HGST), and Timothy Leyden as COO, with new employment agreements for all three.
  • 7The company has outlined specific executive compensation and incentive plans related to the acquisition and integration.

Frequently Asked Questions

This 8-K filing announces Western Digital Corporation's entry into a material definitive agreement to acquire Hitachi Global Storage Technologies (HGST) from Hitachi, Ltd. It details the terms of the acquisition, financing arrangements, ancillary agreements, and leadership changes related to the transaction.

The total purchase price for HGST is approximately $3.5 billion in cash, plus 25 million shares of Western Digital Corporation's common stock. This amount is subject to adjustments based on HGST's working capital, outstanding debt, and other factors at closing.

Western Digital has secured a commitment for a $2.5 billion senior secured credit facility. This facility is intended to finance a portion of the cash consideration, refinance existing debt, and cover related fees and expenses. The remaining cash portion will likely be funded by existing cash reserves or other sources.

The closing of the HGST acquisition is subject to several conditions, including obtaining necessary antitrust approvals in various jurisdictions, the absence of government restraints, no material adverse effects on either company, and other customary closing conditions. The transaction is expected to close in the third calendar quarter of 2011.