LAKE FOREST, Calif. (AP) - Hard disk drive maker Western Digital Corp. said Thursday it plans to acquire Komag Inc., a magnetic disk storage company, for $1 billion in cash, or $32.25 per share.
The transaction will be structured as a cash tender offer for all the outstanding shares of Komag common stock, followed by a merger of a Western Digital subsidiary into Komag. The remaining Komag shareholders will receive $32.25 in cash per share.
Western Digital plans to fund the transaction through a combination of cash and proceeds from a senior secured term loan of up to $1.25 billion.
Western Digital said the acquisition will strengthen its position in the hard drive market by integrating the media component.
''While the primary purpose of the acquisition is strategic in terms of access to technology and supply, we expect to realize meaningful cost benefits,'' said Western Digital Vice President of Finance Tim Leyden in a statement.
He added the deal is expected to drive incremental gross margin and net margin improvements within 12 months, before the amortization of acquisition-related intangibles.
The acquisition has been approved by the boards of both companies and is expected to close in the third calendar quarter of 2007, pending regulatory approvals and other closing conditions.