Hitachi pins $2bn price tag to IBM HDD unit

Hitachi Ltd and IBM Corp have crossed the Ts and dotted the Is on the agreement for Hitachi to take over IBM's hard disk drive business, originally announced in April. The price tag is $2.05bn, somewhat higher than had originally been estimated by company watchers.

Under the terms of the deal, ownership of the HDD unit will be transferred to a new company, which will be 70% owned by Hitachi. The Tokyo-based firm will gradually take control over more of this subsidiary, making a series of fixed payments to IBM, until it becomes wholly owned three years from now.

Staff from both companies are being transferred to the new San Jose, California-based venture, which will be headed by Jun Naruse, currently Corporate Managing Director of Hitachi, and the chief operating officer will be Douglas Grose, currently general manager of IBM's Storage Technology Division.

Hitachi will select the new company's board of directors, and IBM will not be involved in its operations. The company will have about 24,000 employees, 18,000 from IBM and 6,000 from Hitachi, with manufacturing facilities at 11 locations, and is expected to bring in sales of $5bn next year.

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