Toshiba Nears Final Stages of Negotiations to Acquire Fujitsu’s Hard Drive Biz

Fujitsu Is About to Sell Hard Drive Business to Toshiba

by Anton Shilov
01/13/2009 | 11:00 PM

Toshiba Corp., a maker of various electronics, is reportedly in the final stages of discussions to acquire hard disk drive (HDD) business of Fujitsu. The move will expand potentially profitable business for Hitachi and will take the money losing unit away from Fujitsu. What is surprising is that estimated cost of the deal is below the price of Fujitsu’s HDD biz which was discussed during Fujitsu – Western Digital talks earlier.

 

“It’s true that we are in talks with Fujitsu on the matter, but nothing has been decided at the moment,” Keisuke Ohmori, a spokesman at Toshiba in Tokyo, said by telephone in an interview with Bloomberg news-agency. Fujitsu makes no secret that it is in talks with multiple companies to sell off its hard drive business unit.

According to Nikkei business daily, Toshiba is projected to pay Fujitsu approximately ¥40 billion ($557.84 million) for hard disk drive business of the latter. The sum is much lower compared to the sum that was discussed when Fujitsu was in talks with Western Digital over its HDD unit, which means that Fujitsu wants to get rid of the business at any cost. Back in October ’08 Western Digital was rumored to be planning to acquire Fujitsu’s HDD business unit along with plants in Japan, the Philippines and Thailand for ¥70 billion to ¥100 billion, which was from US$661 million to US$944 million at the time. At present, the actual price of Fujitsu’s HDD business unit would be from US$775.6 million to US$1.108 billion.

Toshiba held a 7.2% share of the $32.8 billion global market for hard drives in 2007, making it the fifth-biggest producer, followed by Fujitsu with 6.9%, according to data from iSuppli Corp.

Neither Fujitsu nor Toshiba are making commodity hard drives for desktop computers in 3.5” form-factor, therefore, the combined business of the two will rely on hard disks aimed at the growing market of mobile computers. Nevertheless, since Fujitsu’s HDD business is not profitable, Toshiba will have to restructure it going forward.