Feeds

Western Digital gets China's nod to gobble Hitachi GST

But devouring delayed by two years

Boost IT visibility and business value

Western Digital has gained China's approval for its Hitachi GST acquisition, but the integration of the two cannot take place for two years.

Western Digital and Hitachi GST have agreed the acquisition but both EU and Chinese anti-competition regulators have had concerns, delaying their approval of the deal. WD and Toshiba have done a deal concerning 3.5-inch drive capacity to meet EU regulatory concerns.

Stifel Nicolaus analyst Aaron Rakers has seen a translated version of the Ministry of Commerce of the People’s Republic of China (MOFCOM) announcement of its conditional approval of the WD-HGST combination.

He said the conditions are:

  • The maintaining of HGST (Viviti) at the capacity of its pre-transaction state including research and development, production, procurement, marketing, sale, administrative, and other roles.
  • HGST to continue to produce its existing production lines and maintain its production/sales teams.
  • The implementation of firewalls (Chinese walls!) to ensure no exchange of competitive information between WD and HGST.
  • Monthly reporting of production capacity and output to the supervision of a trustee.

Western Digital has a week to submit a detailed operating plan reflecting these conditions to China's Ministry of Commerce. The conditions will be in place for 24 months, unlike similar conditions China imposed on Seagate's Samsung acquisition, which will be in place for 12 months.

Rakers indicates this is a positive move in terms of WD completing the HGST acquisition by 7 March – any later and it triggers a $250m termination payment by WD to HGST.

El Reg wonders why the Chinese bureaucrats are bothered to this extent. Why are they adding cost to WD's post-acquisition period and limiting its opportunities to increase manufacturing efficiency by integrating all the HGST and WD plants and having single R&D facility?

Sure, MOFCOM, seems to be saying, WD and HGST can get married: but no bonking and no kids for two years, and no living in one home. HGST's salary can be paid in to WD's bank account, but that's all. You can't go on holiday together, sleep together, eat together or plan your future together – and don't complain or the trustee will smack your wrists and delay things even more.

Who are these people in MOFCOM, these anti-competitive practices regulators? On the one hand China is trying to gain and benefit from monopolies in the supply of graphite and rare earths, and on the other hand it's trying to regulate HDD supply so that consumers won't be adversely affected by a concentration of suppliers. ®

Build a business case: developing custom apps

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
Mozilla's 'Tiles' ads debut in new Firefox nightlies
You can try turning them off and on again
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Banking apps: Handy, can grab all your money... and RIDDLED with coding flaws
Yep, that one place you'd hoped you wouldn't find 'em
TROLL SLAYER Google grabs $1.3 MEEELLION in patent counter-suit
Chocolate Factory hits back at firm for suing customers
Kaspersky backpedals on 'done nothing wrong, nothing to fear' blather
Founder (and internet passport fan) now says privacy is precious
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
Ex-IBM CEO John Akers dies at 79
An era disrupted by the advent of the PC
prev story

Whitepapers

Gartner critical capabilities for enterprise endpoint backup
Learn why inSync received the highest overall rating from Druva and is the top choice for the mobile workforce.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Rethinking backup and recovery in the modern data center
Combining intelligence, operational analytics, and automation to enable efficient, data-driven IT organizations using the HP ABR approach.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.