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China Group Buys Into Western Digital

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Western Digital Corporation, America's industry-leading maker of storage solutions (the HGST, WD and G-Technology brands) enters into an agreement to sell about 15% to Unisplendour Corporation Limited (Unis), a leading information technology company in China (selling PCs, servers, storage, networking equipment-- and is expanding to cloud computing, mobile internet and big data processing.)

Weiguo Zhao, Chairman, Tsinghua Unigroup

Unisplendour is the asset management arm of the Tsinghua University's Tsinghua Unigroup in China. Consumer electronics maker Tongfang (the people that brought out the Seiki 50" 4K TV in USA for a shocking $1300 in 2013) is part of the family, as well as the Tsinghua Science Park.

As Chairman of Tsinghua Unigroup (and Unisplendour Corporation), 48-year-old Weiguo Zhao’s deals have made Tsinghua Unigroup, which until a few years ago was just another state-controlled company exporting scanners and herbal medicine drinks. Now it is a champion of Beijing’s overseas ambitions. Via the Tsinghua Unigroup he is also reportedly seeking to buy Micron Technologies, the world’s No.2 producer of dynamic random access memory chips, for $23 billion (although this new deal may dull the interest in Micron).

The agreement calls for a subsidiary of Unis to make a $3.775 billion equity investment in Western Digital. Unis has agreed to purchase newly-issued Western Digital common stock at a price of $92.50 per share.

Immediately following the closing of the investment, Unis will hold approximately 15% of Western Digital’s issued and outstanding shares of common stock based on the number of issued and outstanding shares as of Sept. 25, 2015.

Unis will have the right to nominate one representative to the Western Digital board of directors and will be subject to a 5-year position standstill and voting restrictions. The board representative right terminates if Unis’ ownership falls below 10%. In addition, Unis has agreed to a 5-year lock-up on its shares, with a limited number of shares becoming available for transfer each year.

Proceeds from the investment, says WD, will go toward strengthening Western Digital’s balance sheet, providing financial flexibility and pursuing long-term strategic growth initiatives.

“The equity investment by Unis will help facilitate our growth as we look to capitalize on the many opportunities and changes within the global storage industry,” says Steve Milligan, president and chief executive officer, Western Digital. “This investment reflects Unis’ strong support for Western Digital’s value-creation efforts.”

“We are excited to establish a relationship with Western Digital, a leading company in the storage industry with a capable and talented management team and workforce. We believe this long-term investment will serve as a constructive collaboration model for Chinese and U.S. companies to work together for success,” notes Weiguo Zhao, chairman of Tsinghua Unigroup and Unisplendour Corporation.

The closing of this investment transaction is subject to certain regulatory approvals and other customary closing conditions.

Go Western Digital on China Deal

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