NEW YORK (TheStreet) -- Western Digital (WDC) dipped lower on Friday on news Hitachi will sell approximately 44% of its stake in the digital storage maker.
Hitachi received 25 million shares as part of compensation for Western Digital's purchase of its hard drive unit.
Western Digital announced it will engage in a secondary public offering of the 10.87 million shares Hitachi is selling. The offering will raise around $728 million or $67 a share, an approximate 3% discount on current share prices.
The Irvine, Calif.-based company has also proposed a 30-day option whereby underwriters can purchase an additional 1.63 million shares. Goldman Sachs and Bank of America are acting as lead book-running managers for the deal, while JPMorgan is joint book-running manager.
Shares fell 1.4% to $68.67 early Friday afternoon, chipping away at the 61.6% gain in the year to date.
TheStreet Ratings team rates Western Digital as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about its recommendation:
"We rate Western Digital (WDC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows: