Buying heads

The bankruptcy court presiding over the assets of Read-Rite Corporation has approved the sale of the company to Western Digital for $95.4 million cash.

Western Digital will acquire Read-Rite’s wafer fabrication operation in Fremont, CA, and will have an option to purchase Read-Rite’s operations in Thailand. The Thailand operations have un-negotiated debt obligations of approximately $62 million.

Western Digital said it intends to fund the acquisition through working capital. The transaction is expected to close within 10 days, subject to the terms of the sale order issued by the bankruptcy court.

Read-Rite designs, manufacturers and markets magnetic recording heads as head gimbal assemblies (HGAs) and incorporates multiple head gimbal assemblies into head stack assemblies (HSAs).

Western Digital indicated that the planned acquisition is aimed at improving its access to recording head technologies. In the near term, the company has secured adequate supply of recording heads for the foreseeable future, including 80 GB technology, from merchant market suppliers.