EC approves Western Digital's Hitachi storage takeover

Western Digital's £2.8bn takeover of Hitachi's storage subsidiary has gained conditional approval from the European Commission.

The Commission said on Wednesday that the Irish subsidiary of the US storage firm could buy Viviti Technologies, until recently known as Hitachi Global Storage Technology. However, it said Western Digital would first have to secure a buyer for its 3.5-inch hard-disk drive (HDD) production assets.

"Hard-disk drives are a key component of computers and other sophisticated electronic devices as they are used to store a growing bulk of data in the digital economy," competition commissioner Joaquín Almunia said in a statement. "The proposed divestiture will ensure that competition in the industry is fully restored before the merger is implemented."

The two companies announced the sale in March. Two months later, the Commission said it was to investigate the merger along with that of Samsung's HDD division and Seagate.

Samsung and Seagate got their go-ahead in October, free of conditions.

Regarding Western Digital and Viviti, the Commission had been worried about the effect of the deal on competition in the 3.5-inch desktop and consumer electronics HDD markets. With Samsung and Seagate merged, a further marriage of Western Digital and Viviti would leave just two major players in the market.

"This is a problem because for security of supply reasons, most customers on these markets multi-source HDD purchases," the Commission said in its statement. "Toshiba only recently entered the market for 3.5-inch Business Critical HDDs and it is uncertain whether it could replace the competitive constraint presently exerted by Viviti."

To allay these fears, Western Digital proposed it sell off its 3.5-inch HDD production plant, while also transferring or licensing the necessary intellectual property rights to the buyer. Staff and HDD component supply will also be part of the package.

This satisfied the Commission, which made the promised divestment a condition of its approval.