IRVINE, Calif. ( TheStreet) -- Western Digital's (WDC - Get Report) $4.3 billion acquisition of Hitachi Global Storage Technologies will significantly boost the hard drive maker's enterprise presence, according to analysts.
"I think it's a really great move," said Greg Schulz, senior adviser at analyst firm Server and StorageIO Group. "It gives Western Digital a higher-end drive -- they have never really been perceived as an enterprise player."
|Western Digital is buying Hitachi Global Storage Technologies for $4.3 billion.|
"Western Digital didn't really play in the enterprise segment, which has better gross margins," Kaushik Roy, an analyst at Wedbush Morgan, told TheStreet. "If you buy Hitachi, you're becoming an instant player in the big enterprise segment -- also, Hitachi has a joint venture with Intel (INTC) where they are making solid state disks (SSDs) -- this also gives Western Digital access to those assets."
Investors are equally bullish on the deal, which is expected to close in the third quarter. Western Digital's shares were soaring more than 13% at midday Monday, up $4.11 to $34.12."We now have opportunity to realize a series of very significant long-term benefits for our shareholders," said John Coyne, Western Digital's CEO, in a conference call before market open."This is a unique development -- it combines the resources of two of the world's most profitable hard-drive companies." In addition to Hitachi GST's presence in enterprise storage, Western Digital is also gaining the Japanese firm's manufacturing plants in China and the Philippines. "