Lake Forest-based Western Digital Corp. is getting a bargain by buying San Jose’s Komag Inc. in a deal that allows it to keep pace with key rivals, according to Forbes.
On Thursday, Western Digital said it plans to pay $1 billion to buy disk drive parts maker Komag, including assumption of debt.
Komag makes thin-film metal disks, the part of a drive that stores data. The move allows Western Digital to produce just about all of a drive on its own.
Rivals Seagate Technology and Hitachi Ltd. have upped their production of disks, cutting business with Komag and putting pressure on Western Digital, according to a report on Forbes.com.
Shares of Komag are down 30% in the past year, allowing Western Digital to buy the company at a low point.
Western Digital won’t be looking to sell Komag disks to other drive makers but rather to make its own operations more effcient.
Adding Komag is set to improve profits within a year, Western Digital Chief Executive John Coyne said in a statement.
The buy builds on Western Digital’s 2003 acquisition of then-bankrupt Read-Rite Corp., which makes heads that read metal disks.
