SAN FRANCISCO (AP) -- Western Digital Corp. is trying to pull further away in its neck-and-neck race with Seagate Technology PLC to be the world's biggest maker of hard drives.
Western Digital announced Monday that it's paying $4.3 billion in cash and stock to acquire Hitachi Global Storage Technologies.
The deal is one of the largest in an industry that's been consolidating for decades, and gives the combined companies about half of the worldwide hard-drive market. Seagate owns less than a third of that market.
A hard drive is a key data-storage technology for computers, and in picking up the Hitachi business, Western Digital is picking off one of the last key players. It's giving itself a foothold in the market for drives that go into servers and corporate-level storage arrays. That's been a weakness for a company mostly known for selling hard drives that go into consumer PCs.
Western Digital is the No. 1 hard drive maker, just ahead of Seagate in terms of units sold. Hitachi is No. 3.
The news sent Western Digital's stock up 11.6 percent, or $3.47, to $33.48. Shares of Hitachi Ltd., Hitachi Global Storage's parent, rose 5.7 percent, or $3.50, to $64.74.
The acquisition shows how few targets are left in an industry that has aggressively contracted and is under pressure. The only other key players are Toshiba Corp. and Samsung Electronics Co.
Traditional, spinning hard drives are beginning to see serious competition from a different type of storage technology. Tablets and smart phones, which use solid-state flash memory, are starting to overshadow computers, which mostly still use hard drives.
Jayson Noland, an analyst with Robert W. Baird & Co., noted that in the 1980s there were as many as 80 hard drive makers. Chronic overproduction depressed prices and allowed big players to scoop up their beaten-up rivals.
Noland said Hitachi's hard drive business had been "a thorn in the side of this industry for a long time in overproducing drives. They're a part of a bigger company and didn't seem to care if they lost money."
But Hitachi has established relationships with business customers, which Western Digital coveted.
Executives from Western Digital and Hitachi took pains on a conference call with analysts to emphasize the measures they're taking to avoid losing market share because of the combination. But because computer makers want to have multiple suppliers to keep prices low, Noland said it's likely that Western Digital and Hitachi will lose some customers when the deal closes.
"It's a good deal, and to be honest, Seagate should send flowers to Western Digital," he said. "They're going to be the natural recipient of market share, just because Western Digital did this."
