Toshiba will acquire Western Digital's 3.5-inch HDD manufacturing equipment and related intellectual property. In addition, the Japanese company will transfer to Western Digital an HDD manufacturing subsidiary located in Thailand.

The transactions are essential in order WD to close the purchase of Hitachi's hard disk drive business (HGST) for $4.3 billion. Last November, Western Digital secured conditional approval from the European Union's competition regulator to purchase Hitachi's hard disk drive business. However, the approval was conditional upon the divestment of essential production assets for 3.5-inch hard disk drives (HDD), including a production plant, and accompanying measures.

The asset package covered by today's agreement will enable Toshiba to manufacture and sell 3.5-inch hard drives for the desktop and consumer electronics markets and will enhance its ability to manufacture and sell 3.5-inch hard drives for near-line (business critical) applications.

WD also reported that it has agreed, subject to completion of the divestiture transaction, to purchase Toshiba Storage Device (Thailand) Company Limited (TSDT). TSDT manufactured hard drives but has not resumed operations after the recent Thailand flooding. The principal assets of TSDT are its Thailand property, facilities and employees. Subject to completion of the transaction, WD plans to integrate these facilities and employees into its Thailand operations. The financial terms of the two agreements were not disclosed.

Toshiba and Western Digital aim to complete the acquisition and transfer by March of this year after obtaining approval from the relevant authorities.

The closing of the transactions with Toshiba is conditioned on WD's closing of its planned acquisition of HGST, which remains subject to several closing conditions, including the receipt of certain remaining antitrust approvals. Subject to obtaining these approvals, WD is targeting the transactions with Toshiba to close in March 2012.

Toshiba is expected to benefit from the transactions. The purchase of part of Western Digital's 3.5-inch HDD manufacturing equipment and with it the capability to produce 3.5-inch HDDs for desktop PCs, DVR and other consumer applications, will expand Toshiba's portfolio and enable the company to supply products covering all segments of the HDD market. It will also expand Toshiba's supply capacity in the market for near-line HDDs, which is expected to expand with the continuing growth of the server market, further reinforcing a strategic segment of the company's HDD business.

In July 2011 Toshiba unified the Semiconductor Company and the Storage Products Company, covering NAND flash memories, SSDs and HDDs, and is now positioned to carry out coordinated sales promotions to a wide range of customers.

Toshiba plans to transfer the shares of TSDT to Western Digital and consolidate HDD production at its two HDD manufacturing facilities in the Philippines and a contract manufacturer in China.

Following the reinforcement of its HDD businesses through this re-organization, Toshiba aims to establish itself as a leading provider of integrated storage solutions?the company that has all three key storage solutions: NAND flash, SSD and HDD.