(Updated with analyst comment, 2:03 ET.)

March 7, 2011 – Storage hardware provider Western Digital announced a $4.3 billion cash and stock proposal for a data storage subsidiary of global technology vendor Hitachi.

Under the new prospective ownership, Hitachi Global Storage Technologies would expand its research and development of its enterprise-level hard disk and solid state drives, and external storage solutions and services, Western Digital stated in a news release. The resulting “customer-focused storage company” from the proposed acquisition would include more storage portfolio offerings, said John Coyne, president and chief executive officer.

Steve Milligan, president and chief executive officer at the Hitachi storage company, said: "Together we can provide customers worldwide with the industry's most compelling and diverse set of products and services, from innovative personal storage to solid state drives for the enterprise."

Hitachi was formed in 2003 from a merger between its parent company and IBM.

Tom Coughlin, president and analyst at Coughlin Associates, a consultancy that focuses on data storage and the hard disk drive (HDD) market, said as the two companies stand prior to the merger, the deal would give Western Digital about 48 percent of world HDD storage shipments, though there will likely be some consolidation from an acquisition. Connections between the Hitachi solid-state production unit and chipmaker Intel, and some recent successes with Hitachi’s storage portfolio could make this acquisition a “big plum” for Western Digital, says Coughlin.

“One of the things that remains to be seen is if [Western Digital] can retain intact the growing market share of specialty features and services at Hitachi with their traditional storage environments, or if they keep them separate,” Coughlin says.

Boards of directors for each company have approved the deal, which includes $3.5 billion in cash and $750 million in stock. The company would operate under the Western Digital imprint and keep its headquarters in Irvine, Calif. The Hitachi parent company would retain approximately 10 percent of Western Digital’s shares.

The deal is subject to closing conditions.