Western Digital to Buy Komag

The companies will merge in a $1 billion deal.
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Storage giant Western Digital (WDC) - Get Report will buy media disk maker Komag (KOMG) in a deal worth about $1 billion.

The companies said Thursday Western will pay Komag shareholders $32.25 a share, marking a 9% premium above Komag's closing price Thursday of $29.58.

The transaction has been unanimously approved by each company's board and is subject to customary closing conditions, including regulatory approvals, and is expected to close in the third quarter of 2007.

Western will fund the transaction, including the expected retirement of Komag's convertible notes due 2014, through a combination of the companies' cash and proceeds from a senior secured term loan of up to $1.25 billion.

In recent after-hours trading, shares of Komag climbed $2.17, or 7.3%, to $31.75; Western Digital closed Thursday off 1% to $19.53.

Separately, Komag said it expects second-quarter revenue to fall at least 30% from the first quarter, inducing a "substantial" operating loss for the quarter.