China approves conditionally Seagate acquisition of Samsung HDD unit

China said the deal would limit competition in the hard disk drive market

China has approved Seagate Technology's proposed acquisition of Samsung Electronics' hard disk drive (HDD) business, but with conditions, including measures to minimize potential price increases after the deal, the country's Ministry of Commerce said on Monday.

In April, the two companies announced that Samsung would sell its HDD business to Seagate for US$1.4 billion. The announcement came a month after rival Western Digital said it would acquire the hard drive business of Hitachi for $4.3 billion in cash and stock. If the acquisitions are completed, Seagate, Western Digital and Toshiba will be left as the three main players in the hard drive market.

China's Ministry of Commerce said in a public notice that Seagate's acquisition of Samsung's HDD business would weaken competition in the market. Seagate has a 33 percent share of the global hard drive disk market, while Western Digital's share is 29 percent, and Samsung has a 10 percent share, according to the Ministry of Commerce.

The Ministry, however, approved the deal after both Seagate and Samsung agreed to conditions to limit the acquisition's impact on the market. Seagate will be required to keep the Samsung brand for at least one year, and expand the production capacity of Samsung's HDD business unit for six months.

Under the conditions, Seagate must also establish an independent company that will sell Samsung's HDD products. To ensure prices for Samsung's HDD products remain competitive, Seagate cannot interfere or exchange sensitive information with the Samsung division on pricing, product volumes, or business practices.

Seagate can after one year apply to remove the conditions, according to the Ministry of Commerce.

The European Commission approved the acquisition plan in October

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Tags governmentregulationMergers and acquisitionsbusiness issuesmemoryseagateComponentsSamsung Electronics

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Michael Kan

IDG News Service
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