Hitachi,Toshiba,Fujitsu To Form New HDD Company

CNET News reports Hitachi, the Japanese conglomerate, is talking to Toshiba and Fujitsu about forming a new company dedicated to hard drives and storage systems.

The new company would combine the limping hard drive divisions of Hitachi and Toshiba as well as some of the storage systems technology from Fujitsu. Each would own a third.

The three-way deal is being proposed as an alternative to a private equity buyout. Hitachi has been in discussions with equity firm Silver Lake and others about spinning off its money-losing hard drive group, according to sources and news reports. Those talks, however, have not gone smoothly, sources familiar with the discussions said.

If a deal occurs, it will likely occur by April 1, the beginning of the new business year in Japan.

In December, Hitachi said that it wants to improve its hard drive business, but has not decided to sell it. It has not formally commented since. Toshiba and Fujitsu have yet to return requests for comment.