Hitachi buys IBM disk drive business

Published 
6 Jun 2002

Hitachi is to acquire IBM's hard drive business for $2.05 billion, which it will merge with its own hard drive operations to form a new company.

Hitachi is to acquire IBM's hard drive business for $2.05 billion, which it will merge with its own hard drive operations to form a new company.

Initially, Hitachi will own 70 per cent of the new company. Under the terms of the agreement, after three years it will assume full control following a series of fixed payments to IBM. Hitachi will also acquire IBM's hard drive related intellectual property assets. IBM will retain some of its hard drive operations.

The new company will amalgamate around 24,000 employees, based in 11 manufacturing plants around the world. Hitachi estimates that it will generate around $5 billion in sales in fiscal 2003 - about a quarter of the global market for drives of all sizes. It will dominate the market for 2.5 inch drives, with a 60 per cent share. Hitachi is aiming for revenues of $7 billion by 2006.

Masaaki Hayashi, Hitachi senior vice president, said, 'The purchase of IBM's HDD business brings us the valuable business assets required for long-term success in this highly competitive market. By combining HDD research, development, manufacturing, marketing and sales into an independently operating company, we are creating a new industry leader fully focused on the $20 billion disk-drive market.'

John E Kelly III, senior vice president and general manager of IBM's Technology Group, added that, 'Customers will benefit from the increased efficiencies of the new company and its ability to quickly bring advanced technologies and products to market'

The two companies are also negotiating an alliance for research and development of open, standards-based storage networks and systems.

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