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Toshiba to buy Fujitsu disk drive business

TOSHIBA Corp, Japan's biggest chip maker, will buy Fujitsu Ltd's unprofitable hard-disk drive business to help narrow its gap with Seagate Technology in the US$32.6 billion market.

Toshiba aims to complete the purchase by June 30 and will control 80 percent of the business at first before acquiring full ownership, the Tokyo-based company said yesterday. The companies haven't yet agreed on a price for the transaction, Toshiba spokeswoman Yuko Sugahara said by telephone with Bloomberg News.

The combination will more than double Toshiba's share of the market in four years, helping it challenge Hitachi Ltd for third place. Revenue at the hard-disk drive business will rise to about 600 billion yen (US$6.5 billion) in the year ending March 2013, Toshiba said, without giving comparative figures.

"The acquisition will help Toshiba secure the market share necessary to survive continuing consolidation in the crowded disk-drive market," said Yuichi Ishida, an analyst at Mizuho Investors Securities Co in Tokyo.

Toshiba, the industry's fourth-ranked producer, said that the Fujitsu business will help raise its market share to 20 percent by 2015.

The company controlled 8.7 percent of the market by unit shipments in 2008, against 7.3 percent for Fujitsu and 17 percent for Hitachi, said Tokyo-based Techno Systems Research Co.

Toshiba tumbled 3.9 percent to close at 248 yen in Tokyo trading yesterday, before the announcement. Fujitsu slipped 0.6 percent to end at 362 yen.



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