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.