Western Digital buys platter maker Komag

Posted on Tuesday, Jul 03 2007 @ 03:05 CEST by Thomas De Maesschalck
Hard drive maker Western Digital announced the acquisition of Komag for approx. $1 billion.
The transaction will be structured as a cash tender offer for all the outstanding shares of Komag common stock, followed by a merger of a wholly-owned subsidiary of WD into Komag in which the remaining shareholders of Komag will receive $32.25 in cash. The transaction has been unanimously approved by the board of directors of each company and is subject to customary closing conditions, including regulatory approvals, and is expected to close in the third calendar quarter of 2007.

WD will fund the transaction, including the expected retirement of Komag's convertible notes due 2014, through a combination of the companies' cash and proceeds from a senior secured term loan of up to $1.25 billion.

"This acquisition is a significant step in the evolution and differentiation of WD as a leader in the worldwide hard drive industry," said John Coyne, WD President and Chief Executive Officer. "Following the successful integration of the Read-Rite head assets since 2003, we are very excited by the opportunity to drive incremental profitability and efficiencies in the WD business model through the full integration of Komag's media operation. This acquisition will enable WD to optimize synergies through the integration of heads and media, secure our long-term supply of media, and sharpen our ability to deliver high quality, highly reliable and cost-effective products to our customers. We believe that Komag's highly-skilled employees, an industry-leading position with perpendicular magnetic recording media, and its operational excellence will further strengthen WD's competitive position. Together, we have the right team to deliver on WD's strategy to achieve profitable growth."

Tim Harris, Komag's Chief Executive Officer stated, "We believe WD is the best partner for Komag and are very excited by the benefits this transaction delivers to both our shareholders and employees. In particular, we believe the transaction with WD provides our shareholders with an attractive price as well as value certainty. The acquisition of Komag by WD is the natural next step in the customer-supplier relationship between the two companies. WD is closely embedded as a customer in Komag's processes and is uniquely positioned to benefit from the Komag media capabilities."

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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