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Report: Western Digital Leader to Buy Fujitsu Drive Business

Lake Forest-based Western Digital Corp. is a leading candidate to buy the disk drive business of Japan’s Fujitsu Ltd. in a deal that could be worth more than $600 million.

Fujitsu Chief Financial Officer Kazuhiko Kato told Dow Jones that the company is in talks with several potential suitors with Western Digital being the leader.

Tokyo-based Fujitsu is looking to sell off its computer products operations to focus on technology consulting, where it competes with IBM Corp. and Electronic Data Systems Corp.

China’s Lenovo Group Ltd. has approached the company about buying its personal computer business in Europe, according to the report.

An October report in Japan put the sale of Fujitsu’s drive business at $662 million to $945 million.

A sale could close at a lower range because of a big projected yearly loss for the business and the financial crisis, which has lowered valuations.

Fujitsu’s drive business is projected to lose $107 million in the 12 months through March.

If a deal comes about, it would double Western Digital’s market share in 2.5-inch drives used in laptops to about 30%.

That would put Western Digital ahead of archrival Seagate Technology LLC in 2.5-inch drives.

Seagate, the No. 1 maker of drives, and No. 2 Western Digital control about 60% of the total market for drives used in computers and consumer electronics.

Fujitsu has struggled to compete as the industry’s boom of the past few years gives way to lessened demand and a buildup of unsold drives.

The company left the cutthroat market for PC drives in 2001 to focus on drives for laptops and servers.

In 2002, Western Digital bought a Thailand drive plant from Fujitsu.

A deal for Fujitsu’s remaining drive business would be Western Digital’s second big buy in as many years.

In 2007, the company paid $1 billion for San Jose-based Komag Inc., which makes thin-film metal disks that store data within disk drives.

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