Western Digital has agreed to buy SanDisk for around US$19 billion in cash and stock.
The deal, approved by the boards of both companies, will create a storage giant with expertise in hard disks and flash memory, assuring the future of WD as its traditional business of spinning disks is gradually replaced by solid-state chips.
WD has recent experience of big mergers, having acquired hard disk rival Hitachi Global Storage Technologies in a $3.9 billion deal. Although the deal closed in March 2012, the companies still operate under two separate brands, WD and HGST. However, that may change following approval from China's Ministry of Commerce (MOFCOM) for the companies to more of the two businesses.
SanDisk and WD are already partners: in 2013 they collaborated on a hybrid drive combining a hard disk with solid-state storage.
The WD-SanDisk deal will create a storage business with a giant patent pool -- together, the companies have 15,000 patents granted or pending, according to WD.
WD will offer SanDisk CEO and co-founder Sanjay Mehrotra a seat on its board, while WD CEO Steve Milligan will lead the merged company.
The companies expect to make $500 million in cost savings annually once the deal closes, something they expect to take up to 12 months, they said Wednesday.
SanDisk plans to continue its joint venture NAND flash manufacturing partnership with Toshiba following the deal. On Tuesday, the companies said they had started installing equipment at their new Fab 2 facility in Yokkaichi, Japan. They expect to begin producing 3D flash chips there in the first quarter next year.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.