This will help Western Digital flourish in the enterprise market.
Western Digital is looking to dive deeper into the enterprise sector with an acquisition of solid-state drive maker sTec.
Western Digital has agreed to pay $340 million in cash ($6.85 per share) for sTec, and the acquisition is expected to be complete by the third or fourth quarter of this year.
More specifically, sTec will be acquired by Western Digital’s subsidiary HGST, which will use sTec’s portfolio to enhance its solid-state storage offerings and aid in future projects.
Western Digital has been making moves into the enterprise lately. Just last month, it introduced its Se series of hard drives for the enterprise, which run between $160 and $310. The new family is made for large-scale replicated environments and mid-sized network attached storage.
STec can certainly push Western Digital further in that direction, considering it was the first vendor to develop solid-state drives for the large-scale enterprise. But sTec couldn’t continue standing on its own two feet because it continually lost market share to the likes of Fusion-io Inc., Western Digital and Seagate Technology.
“Solid state storage in the enterprise will play an increasingly strategic role in the future of Western Digital,” said Steve Milligan, president and chief executive officer, Western Digital Corporation. “This acquisition is one more building block in our strategy to capitalize on the dramatic changes within the storage industry by investing in SSDs and other high-growth storage products.”
The Western Digital/sTec deal comes six months after sTec’s largest shareholder, Balch Hill Capital, advised the company to look into a sale.
Before that, sTec’s co-founder — Manouch Moshayedi — resigned as the company’s CEO in September 2012 due to insider trading charges. His brother, Mark Moshayedi, grabbed the title of interim CEO afterward.
STec shares increased 87 percent to $6.74 on NASDAQ this morning.
Source: Western Digital
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