Toshiba Corp. and Fujitsu Limited on Thursday announced that they had concluded a definitive agreement on the transfer of Fujitsu's hard disk drive (HDD) business to Toshiba. The agreement follows a memorandum of understanding (MOU) signed by the companies in February, 2009. The companies will now seek to complete the business transfer by the target date of July 1st, 2009.
Fujitsu's HDD related business and functions will be transferred to a new company, Toshiba Storage Device Corporation (TSDC). The value of the transfer is expected to be approximately ¥30 billion ($303.5 million). Toshiba's 80.1% ownership of TSDC is expected to be valued at approximately ¥24 billion ($242.8 million; at the time of the July close), and the remaining 19.9% ownership holding at approximately ¥6 billion ($60.7 million, to be held by Fujitsu until the end of December 2010). However, these amounts are subject to change upon completion of the transfer.
Upon transfer of the HDD business on July 1st, TSDC will assume net debt of approximately ¥6 billion ($60.7 million). This figure has been excluded from the indicated 30 billion yen value of the transfer.
After the transfer, Toshiba will handle the sales and marketing of all HDD products, including Fujitsu's, and entrust all aspects of design, R&D, quality assurance, production technology, and technology support to TSDC. Fujitsu's sales and marketing offices outside of Japan, with the exception of some offices in certain regions, will be transferred to Toshiba's overseas business operations.
The transfer of the HDD business will see approximately 800 employees in Japan and approximately 7000 employees worldwide transfer to Toshiba Group from Fujitsu Group.
As a result of the deal, Toshiba will reinforce its position as a leading vendor of small form factor HDDs by entering into the enterprise HDD business for server and data storage system applications, where Fujitsu is currently a leader. This move will also allow Toshiba to further enlarge its leading solid state drive (SSD) business by developing SSD products for servers and enterprise storage systems, thus maximizing the synergy with Fujitsu's enterprise HDD technology.