This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Deal: Western Digital Rebounds Following sTec Acquisition

Stocks in this article: WDC STEC

NEW YORK ( TheDeal) -- Western Digital (WDC) was gaining Tuesday, a day after the data storage equipment maker said it will acquire sTec Inc. (STEC) for about $6.85 a share, or $340 million in cash as it seeks to expand its presence in the solid-state drive market.

Western Digital shares were rebounding 2.1% to $59.75, nearly erasing Monday's decline on news of the deal. STec rose a nominal 0.5% to $6.74 following $3.13, or 87%, to $6.72.

The transaction gives a 91% premium to Santa Ana, Calif.-based sTec's closing share price on Friday. Western's HGST subsidiary will absorb sTec.

The deal sidesteps a looming proxy fight for sTec. New York-based hedge fund Balch Hill Partners LP in a 13D filing and an accompanying letter dated June 10 urged shareholders to vote for its slate of nominees at the company's annual meeting set for July 12.

Balch Hill proposed Adam Leventhal, Clark Masters and Eric Singer as new board members to help boost the company's stock, and further asserted that current and former CEOs, brothers Mark and Manouch Moshayedi, have mismanaged the company, leading to dwindling revenue and a 91.3% decrease in share price since September 2009, when the target hit an all-time high of $41.30 a share.

The target nominated Mark and Manouch Moshayedi, and Matthew Witte for the board; Balch has heavily criticized their performance record in filings.

Manouch Moshayedi resigned as chief executive in September over insider trading charges. A disciplinary action by the Securities & Exchange Commission remains pending, according to the buyer.

The proxy campaign began in November when Balch Hill switched from a passive stance to an activist one and raised its stake from 6.4%, to 9.9%, joining forces with New York investment partnership Potomac Capital Partners LLC.

STec reported $103 million in net losses for the year ended Dec. 31, compared to $25.1 million in net income from the previous year. Revenue fell 45.3%, to $168.3 million, across the same period.

The purchase price represents a $207 million enterprise value for sTec, net of the target's cash as of March 31.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs