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EC Clears Western Digital’s Hitachi Acquisition

After selling off some assets, WD’s merger goes ahead, reducing the number of HDD suppliers to to three

Western Digital’s $4.3 billion (£2.7bn) purchase of  rival HDD maker, Hitachi Global Storage Technology (HGST), will go ahead as planned after receiving European Commission  approval Wednesday.

The commission, concerned that, after the Seagate/Samsung merger approved in October, this purchase would reduce the number of competitors to three, and in some markets to two, and have a negative effect on prices and consumers in Europe, opened an in-depth investigation in May 2011.

Dump some baggage

As a result, Western Digital, which announced the deal in March this year, agreed to sell off essential production assets for the manufacture of 3.5-inch HDDs, including a production plant, the transfer or licensing of the IP rights used by the divestment business, as well as the transfer of personnel and the supply of HDD components to the divestment business in order to clinch the deal. The company also promised not to close its HGST deal before asset sale was concluded.

This amendment, said the commission in a a statement, means that the proposed merger will not significantly impede effective competition in the EEA. “Hard disk drives are a key component of computers and other sophisticated electronic devices as they are used to store a growing bulk of data in the digital economy. The proposed divestiture will ensure that competition in the industry is fully restored before the merger is implemented,” said Commission vice president in charge of competition policy, Joaquín Almunia.