December 2, 2002 6:13 AM PST

Feds give nod to IBM-Hitachi deal

The Federal Trade Commission has granted approval for IBM to sell its hard-drive business to Hitachi, the companies said Monday.

Hitachi and IBM said that they have already gotten antitrust approval for the deal from the European Commission, the Japan Fair Trade Commission, Brazil's Conselho Administrativo de Defesa Economica and Taiwan's Fair Trade Commission. The deal still requires regulatory approval from Mexican authorities before it can go forward, the companies said.

The Japanese conglomerate and the U.S. tech giant announced the deal in June. Plans call for a new company to be created, owned 70 percent by Hitachi and 30 percent by IBM. IBM will receive $2.05 billion for the business, which is expected to take three years to transfer. The company would have about 24,000 employees and would be based in San Jose, Calif.

The hard-drive business has not been a financial success for IBM. In 2001, it lost $423 million and, in the third quarter of 2002, it lost $381 million.

But IBM has still been working on new drive technology. The company recently introduced a notebook drive with an 80GB capacity, using the element ruthenium, dubbed "pixie dust" by IBM researchers.

 

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