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March 7, 2011 4:05 PM

O'Melveny Advises Western Digital for $4.3 Billion Hitachi Storage Purchase

Posted by Tom Huddleston Jr.

Irvine, Calif.-based data storage company Western Digital Corporation announced today that it agreed to buy Hitachi, Ltd.'s data storage business for $4.3 billion in cash and stock. 

San Jose-based Hitachi Global Storage Technologies (Hitachi GST) makes hard-disk drives and other data storage components. Under the terms of the deal, Hitachi will get $3.5 billion in cash and about $750 million in stock, giving it a 10 percent stake in Western Digital.  

Western Digital turned to O'Melveny & Myers for legal counsel. That team is led by Los Angeles M&A partner Mark Easton and Newport Beach M&A partner Jay Herron. Also on the deal for O'Melveny: Finance partner Thomas Baxter, tax partner Robert Blashek, benefits partner Wayne Jacobsen, executive compensation partner Jeff Walbridge, and labor partner Eric Amdursky.

The firm advised the company on previous transactions, including on a $1.25 billion bridge facility that was used to finance the acquisition of Komag, Incorporated, in 2007.

Michael Ray is general counsel for Western Digital.

Morrison & Foerster and Skadden, Arps, Slate, Meagher & Flom are advising Hitachi on the transaction. Morrison & Foerster's team is led by the managing partner of its Tokyo office, Kenneth Siegel, along with Tokyo M&A partner David Litt. Other attorneys from the firm include IP partners Paul Jahn and Stuart Beraha, as well as antitrust partners W. Stephen Smith and Jonathan Gowdy. In 2003, Siegel also led the way on Hitachi's $2 billion acquisition of IBM's hard disk drive business--which led to the formation of Hitachi GST.

Palo Alto-based corporate partners Thomas Ivey and Amr Razzak led the legal team for Skadden. The firm previously represented Hitachi in a separate deal with Western Digital that saw the latter sell Hitachi a manufacturing facility in Malaysia in 2009. According to Ivey, Hitachi GST's general counsel, Chris Dewees, served as primary in-house counsel on the deal, along with several members of the company's legal staff. Dewees is a former associate at Morrison & Foerster.

Under the agreement, Western Digital would pay Hitachi the cash, along with 25 million Western Digital shares. The $750 million value is based on a March 4 closing price of $30.01. Hitachi would add two representatives to Western Digital's board. The deal is expected to close in the third quarter.

 

  Contact Tom Huddleston at thuddleston@alm.com.

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