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|HITACHI AND IBM REACH DEFINITIVE AGREEMENT
ON HARD DISK DRIVE OPERATIONS
TOKYO, Japan and SAN JOSE, Calif. -- June 4, 2002 -- Hitachi, Ltd. (NYSE: HIT, TSE: 6501) and IBM today announced that they have reached a definitive agreement to transfer their hard disk drive (HDD) operations to a new standalone company under majority Hitachi ownership. These plans were originally announced in April as part of a larger storage relationship between the two companies.
Hitachi has agreed to purchase the majority of IBM's HDD-related assets for $2.05 billion, which includes the transfer of IBM's HDD-related intellectual property portfolio to the new organization. Hitachi will initially own 70 percent of this new company and will make a series of fixed payments to IBM before assuming full ownership after three years.
The new company will be based in San Jose, California, and managed by an independent team comprising executives from Hitachi and IBM's existing HDD operations. The chief executive officer will be Dr. Jun Naruse, Corporate Managing Director of Hitachi, Ltd., formerly CEO of Hitachi Data Systems, and the chief operating officer will be Dr. Douglas Grose, currently general manager of IBM's Storage Technology Division. Hitachi will select the new company's board of directors, and IBM will not be involved in its operations.
The new organization will bring together approximately 24,000 employees, about 18,000 from IBM and 6,000 from Hitachi, with major manufacturing operations at 11 locations around the world. Certain IBM HDD operations are not included in the deal.
Hitachi estimates the new company may deliver approximately $5 billion in sales in fiscal year 2003, and will target annual sales of $7 billion by fiscal year 2006. IBM and Hitachi have each agreed to multi-year HDD supply commitments from the new company.
Pending the completion of applicable regulatory processes, the deal is expected to close before year-end.
"The purchase of IBM's HDD business brings us the valuable business
assets required for long-term success in this highly competitive market,"
said Masaaki Hayashi, Senior Vice President and Director, Hitachi,
Ltd. "By combining HDD research, development, manufacturing, marketing
and sales into an independently operating company, we are creating
a new industry leader fully focused on the $20 billion disk-drive
market. This new company is uniquely positioned for success by its
broad customer portfolio, its unparalleled technological capabilities
and its strong position in key growth markets, including storage-intensive
|Information contained in this news release is current as of the date of the press announcement, but may be subject to change without prior notice.|
|WRITTEN BY Corporate Communications Division