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Positions WD as a Leading Vertically Integrated HDD Supplier--$1 Billion Cash Acquisition of Media Supplier
LAKE FOREST, CA, June 28, 2007-Western Digital Corporation ("WD") (NYSE: WDC), and Komag, Incorporated ("Komag") (NASDAQ: KOMG) announced today that the two companies have entered into a definitive agreement for WD to acquire Komag for $32.25 in cash per share for a value of approximately $1 billion. The acquisition of Komag, a leading media manufacturer, will further strengthen WD's position as a highly-efficient hard drive maker by integrating media, one of the critical technology components of a hard drive.
The transaction will be structured as a cash tender offer for all the outstanding shares of Komag common stock, followed by a merger of a wholly-owned subsidiary of WD into Komag in which the remaining shareholders of Komag will receive $32.25 in cash. The transaction has been unanimously approved by the board of directors of each company and is subject to customary closing conditions, including regulatory approvals, and is expected to close in the third calendar quarter of 2007.
WD will fund the transaction, including the expected retirement of Komag's convertible notes due 2014, through a combination of the companies' cash and proceeds from a senior secured term loan of up to $1.25 billion.
"This acquisition is a significant step in the evolution and differentiation of WD as a leader in the worldwide hard drive industry," said John Coyne, WD President and Chief Executive Officer. "Following the successful integration of the Read-Rite head assets since 2003, we are very excited by the opportunity to drive incremental profitability and efficiencies in the WD business model through the full integration of Komag's media operation. This acquisition will enable WD to optimize synergies through the integration of heads and media, secure our long-term supply of media, and sharpen our ability to deliver high quality, highly reliable and cost-effective products to our customers. We believe that Komag's highly-skilled employees, an industry-leading position with perpendicular magnetic recording media, and its operational excellence will further strengthen WD's competitive position. Together, we have the right team to deliver on WD's strategy to achieve profitable growth."
Tim Harris, Komag's Chief Executive Officer stated, "We believe WD is the best partner for Komag and are very excited by the benefits this transaction delivers to both our shareholders and employees. In particular, we believe the transaction with WD provides our shareholders with an attractive price as well as value certainty. The acquisition of Komag by WD is the natural next step in the customer-supplier relationship between the two companies. WD is closely embedded as a customer in Komag's processes and is uniquely positioned to benefit from the Komag media capabilities."
Tim Leyden, WD's Executive Vice President of Finance, stated, "While the primary purpose of the acquisition is strategic in terms of access to technology and supply, we expect to realize meaningful cost benefits. Those cost benefits should enable the company to achieve incremental gross margin and net margin improvements before the amortization of acquisition-related intangibles within 12 months as we integrate Komag into our operations."
Komag's Updated Business Outlook for the Second Quarter of 2007:
Separately in another press release issued today, Komag updated its business outlook for the June quarter.
Today's Conference Call and Webcast
A joint investment community conference call hosted by WD and Komag focused on the announced transaction will be held today at 2 p.m. PDT to discuss this transaction. The live and archived conference call information is below:
When: Thursday, June 28, 2007 at 2PM Pacific; 5PM Eastern
Dial-in: 888-810-3950 (toll free) or + 1-210-839-8553 (int'l)
Access code: Western Digital
Replay: 800-568-4548 (toll-free) or +1-402-998-0107 (int'l)
Access code: n/a (no code)
Webcast: http://www.westerndigital.com/investor -- Click on Conference Calls
http://www.komag.com
About WD
WD, one of the storage industry's pioneers and long-time leaders, provides products and services for people and organizations that collect, manage and use digital information. The company produces reliable, high-performance hard drives that keep users' data close-at-hand and secure from loss. WD applies its storage expertise to consumer products for external, portable and shared storage products.
WD was founded in 1970. The company's storage products are marketed to leading systems manufacturers, selected resellers and retailers under the WD and WD brand names. Visit the Investor section of the company's Web site (http://www.westerndigital.com) to access a variety of financial and investor information.
About Komag
Founded in 1983, Komag is a leading supplier of thin-film disks, the primary high-capacity storage medium for digital data. Komag leverages the combination of its world-class U.S. research and development center and Malaysian manufacturing operations to produce disks that meet the high-volume, stringent quality, low cost and demanding technology needs of its customers. By enabling rapidly improving storage density at ever-lower cost per gigabyte, Komag seeks to create extraordinary value for consumers of computers, enterprise storage systems and electronic appliances such as digital video recorders, game boxes and consumer electronic storage systems.
