Tandon to Sell Hard-Disk Unit for $80 Million

Tandon said Monday that it has agreed to sell most of its data storage equipment business to Western Digital in a deal valued at nearly $80 million.

The transaction would effectively remove Chatsworth-based Tandon from a business that made it one of the personal computer industry’s best-known suppliers in the early 1980s. The company now will be primarily a personal computer manufacturer.

Western Digital, a fast-growing computer equipment maker headquartered in Irvine, agreed to pay between $40 million and $45 million in cash and equipment for Tandon’s hard-disk drive operation. It also agreed to cover debts of $34 million that Tandon owes to its suppliers.

The deal, which is expected to be completed early next year, reflects another sweeping move by Tandon’s founder, chairman and chief executive, Sirjang Lal (Jugi) Tandon.

Known for PS/2 Work

In an interview, Sirjang Tandon acknowledged that the sale was largely intended to ease the company’s financial strains as it expands further into personal computer manufacturing.

For Western Digital, the deal broadens the product line of a company that mainly has made a type of circuit board that controls the storage and flow of data in personal computers. The company’s sales rose more than 60% to $462.5 million in the year ended June 30.

Western Digital also has drawn attention by becoming one of the first companies to announce products for IBM’s newest line of personal computers, the Personal System/2. In October, Western Digital also introduced a line of semiconductor products that duplicate the operations of IBM’s so-called Micro Channel, a communications pathway inside some of IBM’s new models. Duplicating the functions of the Micro Channel could be the key to cloning this generation of IBM machines, analysts said.