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Western Digital(R) to Acquire Hoya's Magnetic Media Operations
Apr 27, 2010 (07:04 PM EDT)
Acquisition Better Positions WD(R) to Meet Anticipated Future Demand for Hard Drives
LAKE FOREST, Calif., April 27 /PRNewswire-FirstCall/ -- Western Digital Corporation (NYSE: WDC) announced today that it has agreed to purchase the magnetic media sputtering operations of Hoya Corporation and Hoya Magnetics Singapore Pte. Ltd. for 22 billion yen (approximately $235 million) in an all-cash transaction. The agreement includes a multi-year commitment for glass substrate supply related to these operations from Hoya, solidifying WD's access to a key component for its 2.5-inch hard drive business and further enhancing the ongoing partnership between the companies. The acquisition will augment WD's existing magnetic media operations, strengthening its ability to meet anticipated growth in demand for hard drives in the years ahead.
WD(R) is acquiring the facilities, equipment, intellectual property and working capital of Hoya's media sputtering operations, based in Tuas, Singapore, where it expects to employ the entire current workforce. Certain related equipment at Hoya's Nagasaka, Japan, research and development facilities is included. The acquisition is expected to close in the current calendar quarter.
John Coyne, president and chief executive officer of WD, stated, "This investment will enhance WD's ability to support our customers' growth. In addition to these assets, WD will also gain highly skilled and knowledgeable employees, valuable intellectual property and access to Singapore's deep academic and technology resources. We expect a seamless transition with the integration of this well-run operation into WD, enabling immediate support of anticipated hard drive demand growth in 2010 and beyond."
A set of questions and answers related to today's announcement follows.
WD, one of the storage industry's pioneers and long-time leaders, provides products and services for people and organizations that collect, manage and use digital information. The company produces reliable, high-performance hard drives that keep users' data close-at-hand and secure from loss. WD applies its storage expertise to consumer products for external, portable and shared storage products.
WD was founded in 1970. The company's storage products are marketed to leading systems manufacturers, selected resellers and retailers under the Western Digital® and WD® brand names. Visit the Investor section of the company's website (www.westerndigital.com) to access a variety of financial and investor information.
Questions and Answers
Q: Why is this acquisition important to Western Digital? What motivated you to do this?
Q: What is your own assessment of Hoya's production capability? Can you get further improved utilization out of the base assets?
Q: Will you use the facility for glass sputtering only?
Q: How does the product made here compare to what you are currently making in other locations (relative to areal density, quality, etc.)?
Q: How will the Hoya sputtering operation be integrated into WD?
Q: Will WD break apart the Hoya finished media operation and move assets and positions to Malaysia?
Q: How does this acquisition change WD's competitive profile versus the other large vertically integrated players, Seagate and HGST?
Q: What are the terms of the transaction?
Q: When will the transaction close?
Q: Are any anti-trust filings required?
Q: Is there a break-up fee?
Q: How are you going to finance the transaction? How much cash will you use? Do you intend to refinance/issue a convertible/other?
Q: When will the operation be fully integrated into WD?
Q: How long has Hoya been in the media business?
Q: Will you be able to make new generation products with the equipment being purchased?
Q: How does this fit into your technology roadmap?
Q. What effect will this have to the media/substrate demand/supply dynamic for WD and for the HDD industry?
Q: When do you expect to reach full capacity utilization? What will you do with excess disks in the meantime?
Q. Where will the substrate come from? Is there enough substrate supply to allow full capacity utilization especially in the near term?
Q: What is the age and condition of the PP&E? How does it make sense to buy used instead of new?
Q: Are you acquiring any of Hoya's substrate business?
Q. Has Hoya any commitments to service other customers?
Q: What is your internal/external model for media supply?
Q: Do you intend to use Hoya's facilities for your internal glass media needs?
Q: What role will Hoya's Singapore management play in the combined business?
Q: Are you intending to keep Hoya employees?
Q: What do you anticipate WD customer reaction to be with regard to the acquisition?
Q: What do you anticipate WD supplier reaction to be with regard to the acquisition? How will your other media suppliers react?
Q. How does this affect your future growth plans? Do you intend to grow your presence in Singapore? Will you slow down growth in Malaysia or Thailand?
Q: What are the financial benefits of the transaction?
Q: What will this transaction do to your costs?
Q: When do you expect to reach full capacity utilization?
Q: How much incremental capex will you need post-acquisition?
Q: What external sales have you estimated for the media business?
Q: Will you have any synergy savings from R&D and opex?
Q: How does this impact your balance sheet?
Q: Can you expand a bit on the impact on your model?
Forward Looking Statements
This press release and the questions and answers contain forward-looking statements concerning the employment and integration of Hoya's media sputtering workforce; the expected timing of and ability to consummate the proposed acquisition; the impact to WD, including the anticipated benefits and costs, of the proposed acquisition; and the plans, strategies and objectives of management for future operations. The foregoing forward-looking statements are based on WD's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including: the risk that the acquisition will not close or that closing will be delayed; the failure to integrate successfully Hoya's technology, employees or operations; the risk that Hoya's or WD's business may not perform as expected due to transaction-related uncertainty or other factors; the impact of recent uncertainty and volatility in global economic conditions; supply and demand conditions in the hard drive industry; actions by competitors; unexpected advances in competing technologies; uncertainties related to the development and introduction of products based on new technologies and expansion into new data storage markets; business conditions and growth in the various hard drive markets; pricing trends and fluctuations in average selling prices; changes in the availability and cost of commodity materials and specialized product components that WD does not make internally; and other risks and uncertainties listed in WD's recent Form 10-Q filed with the SEC on Jan. 29, 2010, to which your attention is directed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof, and WD undertakes no obligation to update these forward-looking statements to reflect subsequent events or circumstances.
Western Digital, WD, and the WD logo are registered trademarks of Western Digital Technologies, Inc. All other trademarks mentioned herein belong to their respective owners.
SOURCE Western Digital Corp.