Toshiba and Fujitsu reach HDD deal: Nikkei

NEW YORK Wed Jan 14, 2009 12:43pm EST

NEW YORK (Reuters) - Toshiba Corp (6502.T) and Fujitsu Ltd (6702.T) have reached a basic agreement for Toshiba to buy Fujitsu's hard-disk drive business for the equivalent of $340 million to $450 million, the Nikkei newspaper reported.

The sale, which will create the world's largest maker of small hard drives, will be announced possibly by the end of the month, the Nikkei said without citing sources.

The deal was basically sealed on Wednesday during a meeting between Toshiba President Atsutoshi Nishida and Fujitsu President Kuniaki Nozoe, the business daily said.

Toshiba will to buy Fujitsu's hard-drive production and sales networks, which include an assembly plant in Thailand and another in the Philippines, the paper said.

It will also take control of the development segment at Yamagata Fujitsu, a Fujitsu manufacturing unit, it said.

Shares of Toshiba and Fujitsu rose more than 5 percent in Tokyo on Wednesday after Toshiba confirmed that it was in talks to buy the Fujitsu operations.

Both Toshiba and Fujitsu focus on 2.5-inch drives, which are used mainly in laptops.

The combination of their HDD operations would give Toshiba a one-third share in the global market of such devices, putting it ahead of Hitachi Ltd (6501.T) and Western Digital WDC.N.

(Reporting by Ted Kerr, editing by Matthew Lewis;)

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