HDD vendor mega-merger edges closer

Western Digital's buyout of Hitachi Global Storage Technology wins conditional backing from EU

Western Digital's proposed takeover of rival hard disk drive (HDD) vendor Hitachi Global Storage Technology (GST) has been given a conditional green light by the European Commission.

The Commission has ruled that Western Digital must sell off its 3.5in HDD production assets for anti-competitive reasons before its acquisition of Hitachi GST can proceed.

"The merged entity would only face competition from the recently merged Seagate/Samsung," said the European Commission in a press statement.

"Toshiba only recently entered the market for 3.5in business-critical HDDs and it is uncertain whether it could replace the competitive constraint presently exerted by [Hitachi GST]."

The statement confirmed that Western Digital has agreed to the EU's request and will not proceed with its buyout of Hitachi GST until a buyer for its 3.5in HDD production facilities is found.

Joaquin Almunia, commission vice president in charge of competition policy, added: "The proposed divestiture will ensure that competition in the industry is fully restored before the merger is implemented."

Western Digital announced plans to acquire Hitachi GST for $4bn (£2.6bn) back in March, and – at the time – said it expected to seal the deal within the third calendar quarter of 2011.