China's Unisplendour To Buy Western Digital Stake For $3.775 Bln

(RTTNews) - China's Unisplendour Corp. Ltd. has agreed to buy a 15% stake in U.S. hard-drive maker Western Digital Corp. (WDC) for $3.775 billion.

Under the deal, Unisplendour will buy Western Digital's new shares at $92.50 a piece, representing a 33.3% premium to the Irvine, California-based company's closing price on Tuesday.

Unisplendour will have the right to nominate one representative to the Western Digital board of directors following the investment. The company's board representative right will be terminated if its stake falls below 10%.

Unisplendour has also agreed to a five-year lock-up on Western Digital shares, during which it will be subject to position standstill and voting restrictions.

Western Digital will use the proceeds from the investment to strengthen its balance sheet.

"We believe this long-term investment will serve as a constructive collaboration model for Chinese and U.S. companies to work together for success," said Weiguo Zhao, chairman of Tsinghua Unigroup and Unisplendour Corp.

Unisplendour is an A share listed company that specializes in information technology and communications. It is the first university-owned company of Tsinghua University, one of China's most prestigious universities.

In May, Unisplendour agreed to buy a 51% stake in technology giant Hewlett-Packard Co.'s (HPQ) China-based joint venture for $2.3 billion. There were also reports that Unisplendour was interested in buying U.S. memory chip maker Micron Technology Inc (MU) for about $23 billion, but a deal has not materialized amid national security concerns.

Western Digital shares are currently trading at $78.51, up $9.14 or 13.18%. The shares trade in a 52-week range of $67.87 to $114.69.