Technology firm Western Digital Corp. (WDC: Quote) and sTec, Inc. (STEC: Quote) Monday said they have entered into a definitive merger agreement for sTec, Inc. to be acquired by HGST, a wholly-owned subsidiary of Western Digital, for $6.85 per share or about $340 million in cash. sTec shares are surging almost 90 percent in pre-market trading.
The offer price represents around $207 million in enterprise value, net of sTec's cash as of March 31.
sTec is an early innovator in enterprise solid-state drives or SSDs. The deal strengthens HGST's existing solid-state storage capabilities and helps it expand in the area of enterprise SSDs.
HGST, which has a joint development program with Intel Corp. (INTC), will continue to deliver SAS-based SSD products with the chipmaker. HGST will also continue to support existing sTec products.
Steve Milligan, CEO of Western Digital, said, "This acquisition is one more building block in our strategy to capitalize on the dramatic changes within the storage industry by investing in SSDs and other high-growth storage products."
After receiving the unanimous recommendation of a special committee of independent directors of the board, the board of directors of sTec has unanimously approved the merger agreement.
The board has also resolved to recommend that sTec shareholders approve the deal at a meeting to be held to approve the merger agreement and the merger.
The directors and executive officers of sTec have entered into voting agreements to vote their shares in favor of the transaction, subject to certain exceptions.
Wells Fargo Securities, LLC has acted as the financial advisor to Western Digital. BofA Merrill Lynch was the financial advisor to sTec.
Closing of the acquisition is expected to occur in the third or fourth quarter of 2013.
WDC closed at $60.19 on Friday. STEC, which closed at $3.59, is surging 89 percent in pre-market activity.
by RTT Staff Writer
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