Western Digital plans to acquire sTec to boost its presence in the market for enterprise solid-state drives.
The two companies have signed a definitive agreement under which sTec will be acquired by HGST, a wholly-owned subsidiary of Western Digital, for about US$340 million in cash.
The sTec acquisition will enable HGST to accelerate its participation in enterprise SSDs, Western Digital said Monday.
STec in Santa Ana, California, will be integrated with HGST which already has a SSD product line. HGST will continue to support existing sTec products and work with customers to understand their future requirements.
HGST had earlier indicated that it would like to get into the PCIe segment of the enterprise SSD space, and the acquisition will likely help HGST in this connection. STec has already developed SSD products with a broad set of interfaces including PCIe and SAS, which will complement HGST's own line developed with technology from Intel, Western Digital said. HGST will also continue to deliver SAS-based SSD products with Intel under a joint development program.
SAS or Serial Attached SCSI is positioned as an interface for enterprise storage, while PCIe (Peripheral Component Interconnect Express) is an I/O interface between various peripheral components in a system.
STec currently has about 55 issued patents and 78 patent applications pending. All these patent rights are included in the transaction.
The transaction is expected to close, subject to customary conditions, in the third or fourth quarter of this year.
Western Digital may look at further mergers and acquisitions as it looks to expand in cloud storage, solid state storage and other high growth areas. It believes that both SSDs and its traditional hard disk drives business will continue to have a place in tiered storage for the data center, with HDDs storing 75 percent of all data, either in the cloud or locally, by 2020.