Hard drive maker Western Digital looks to acquire STec Inc

Hard drive maker Western Digital Corp plans to acquire STec Inc for about $340 million in cash to expand its solid-state memory capabilities.

The companies agreed to $6.85 a share for STec, a 91-per cent premium over the latter's closing price on 21 June, the companies said in a statement. The deal had an enterprise value of about $207 million, net of STec's cash as of 31 March according to the companies.

The company intends to diversify beyond the Irvine, California-based company's hard-drive roots as consumer demand for smartphones and tablets fuels led to a global slump in personal-computer sales.

Demand for the NAND flash storage technology STec provided was growing as companies like Facebook Inc and Google Inc relied on it for short-term data storage and the use of mobile devices to access the internet increased, according to analysts.

They say though demand for storage was increasing rapidly it was lagging demand for solid-state discs.

''Solid state storage in the enterprise will play an increasingly strategic role in the future of Western Digital,'' Steve Milligan, Western Digital's chief executive officer, said in the statement. ''This acquisition is one more building block in our strategy to capitalize on the dramatic changes within the storage industry.''

The completion of the deal is expected to happen before the end of the year.

Under a definitive agreement signed by the two companies, sTec would be acquired by HGST, a wholly-owned subsidiary of Western Digital, for about $340 million in cash.

The STec acquisition would allow HGST to ramp up its participation in enterprise (solid state drive)SSDs, Western Digital said yesterday.

STec in Santa Ana, California, would be integrated with HGST which already had a SSD product line. HGST would continue to extend support to existing sTec products even as it worked with customers to understand their future requirements.

HGST had earlier indicated that it would like to enter the PCIe segment of the enterprise SSD space, and the acquisition would likely help HGST in this connection, according to commentators. STec had already developed SSD products with a broad set of interfaces including PCIe and SAS, which would complement HGST's own line developed with technology from Intel, according to Western Digital.

The company would also continue delivery of SAS-based SSD products with Intel under a joint development program.

SAS or Serial Attached SCSI has been positioned as an interface for enterprise storage, even as PCIe (Peripheral Component Interconnect Express) was an I/O interface between various peripheral components in a system.