Western Digital Wraps Up Sale of Unit

Irvine-based Western Digital Corp. has completed the sale of its disk media business to Komag Inc. for stock, loans and cash worth $73.6 million, the companies said Friday. Half of the 1,100 positions in the disk media locations in San Jose and Santa Clara will be eliminated over the next 18 months as part of a consolidation between the two media operations, the companies said. San Jose-based Komag has its manufacturing facilities in Malaysia. The deal calls for Western Digital to receive 10.8 million Komag shares representing a one-sixth ownership of Komag, $30.1 million in a three-year note, and $1.6 million in cash. Western Digital can sell the shares in specified increments over a 3 1/2-year period. If the return on the stock exceeds a targeted amount over three years, the excess amount will reduce the balance due on the note. The companies did not disclose what price would trigger that provision. As a result of the deal, Western Digital will take a $20-million charge against its earnings in the June quarter, including $3 million in cash, to account for the layoffs that occur during the transition. The company had previously said it would take a charge of $10 million to $15 million. Komag stock closed Friday at $3.88, up 31 cents or nearly 9%. Western Digital stock fell 13 cents to close at $7.25.