Western Digital buys flash memory maker Virident, focus now on Fusion-io

Mon Sep 9, 2013 1:34pm EDT
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By Neha Alawadhi

(Reuters) - Western Digital Corp said it would buy Virident Systems Inc for $685 million as the hard drive maker and Seagate Technology Plc battle for a piece of the fast-growing market for solid-state drives used in servers.

Shares of Virident rival Fusion-io Inc were up 20 percent at midday, with analysts saying the storage drive maker was a likely acquisition target for Seagate, one of the backers of Virident.

Seagate and Western Digital dominate the hard disk-drive market, and have been trying to expand their presence in the faster and more energy efficient solid-state drives (SSDs) market as demand slows in a declining PC market.

Revenue from the enterprise SSD market will grow to $7 billion by 2017 from $2.5 billion last year, Western Digital said, quoting research firm IDC.

Western Digital bought troubled SSD maker Stec Inc for $340 million in June to become one of the top players in the flash drive market.

The company's high offer price for Virident compared with that for Stec suggests that it was involved in a bidding war with Seagate, FBN Securities analyst Shebly Seyrafi said.

Western Digital was not the only company to bid for Virident, it said on a conference call with analysts.

A Seagate spokesman said it does not comment on "rumored, potential or pending acquisition".   Continued...

A Western Digital Corp's hard drive is seen at an electric appliance store in Tokyo, in this picture illustration taken March 8, 2011. REUTERS/Kim Kyung-Hoon