Japan’s Toshiba Corp said it in talks to buy Fujitsu Ltd’s hard-disk drive business, a deal that would create the world’s largest maker of small hard drives and is reportedly worth $340-450 million.
Shares in both Toshiba and Fujitsu surged more than 5% on the news.
Toshiba sees hard-disk drives as a growth business, while Fujitsu has been exploring ways to turn around its loss-making HDD operations and concentrate on its IT consulting business. Talks with US rival Western Digital to sell its HDD business were reported to have fallen through late last year. Small hard drives are used in electronics products such as laptops and car navigation systems.
“Size matters in the hard-drive business, and Toshiba would be able to benefit from being the biggest maker of 2.5-inch drives,” said Mitsubishi UFJ Securities analyst Yukihiko Shimada. “If the deal goes through, it would also be able to seek synergies with NAND, SSD and server-use devices,” he said.
Toshiba spokesman Keisuke Ohmori confirmed a report by the Nikkei business daily that the company is in talks to buy Fujitsu’s HDD business but declined further comment as the talks are ongoing. Fujitsu spokesman Etsuro Yamada said the company was in talks with multiple parties about the future of its HDD operations, including a possible sale or alliances.
Toshiba, the world’s No. 2 maker of NAND flash memory after Samsung Electronics, has bet heavily on NAND-based solid state drive (SSD) memory devices, seen as a promising alternative to some hard disk drives as they consume less energy.
The Nikkei said a deal between Fujitsu and Toshiba would likely be worth ¥30-40 billion ($340-$450 million), adding that a deal would be announced at the end of the month if the heads of the two companies come to an agreement at a meeting this week. The newspaper said Toshiba wants to buy Fujitsu’s hard-drive manufacturing and sales networks, including two hard-drive plants, one in Thailand and one in the Philippines.
A deal is not expected to include a plant in Nagano prefecture, north of Tokyo, where Fujitsu makes hard-drive parts, or the hard-drive production segment of Fujitsu unit Yamagata Fujitsu, it said. Fujitsu is looking at selling its remaining hard-drive operations to other firms with an eye on withdrawing from the business altogether, the Nikkei said. Fujitsu competes with International Business Machines Corp and Hewlett-Packard in IT services. (Reuters)