In a move that is sure to surprise some, Unisplendour Corporation Limited (Unis), a Chinese firm, is taking up a 15% stake in Western Digital. With an investment of $3.775 billion, Unis will be the largest single shareholder, though the shares come with a 30% premium and do not give it any control over the second largest HDD manufacturer.
In exchange for their 15% stake, Unis does get to appoint a member to the board of directors for WD. Given that Unis is controlled by the Chinese government and WD does have sensitive matter it has to deal with at times, the Unis board member will not participate in those discussions. Unis will also not get access to any WD IP. Interestingly, Unis is closely tied to Tsinghua Holdings, an investment firm that has made some moves to acquire the NAND and memory manufacturer Micron.
Given the close ties Unis has with the Chinese government, the HGST-WD merger which has been held up by Chinese regulator MOFCOM should now get approval. Western Digital has been attempting to diversify their business away from pure HDDs with inroads made in hybrid disks and enterprise SSDs. With $3.775 billion extra, WD can go around acquiring all the technology and IP they need to remain relevant in the post-HDD world.
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