Western Digital Sells IntelliFlash Business to DDN; Intends to Exit Storage Systems

Western Digital has entered into a definitive agreement to sell its IntelliFlash business to DDN. In addition, Western Digital and DDN have agreed to expand their existing partnership through a multi-year strategic sourcing agreement, under which DDN will increase its purchase of Western Digital’s HDD and SSD storage devices.

This announcement is part of Western Digital’s strategic intention to exit Storage Systems, which consists of the IntelliFlash and ActiveScale businesses. The company is exploring strategic options for ActiveScale. These actions will allow Western Digital to optimize its Data Center Systems portfolio around its core Storage Platforms business, which includes the OpenFlex™ platform and fabric-attached storage technologies.

“As we look to the future, scaling and accelerating growth opportunities for IntelliFlash and ActiveScale will require additional management focus and investment to ensure long-term success,” said Mike Cordano, president and chief operating officer. “By refocusing our Data Center Systems resources on our Storage Platforms business, we are confident that the Western Digital portfolio will be better positioned to capture significant opportunities ahead and drive long-term value creation.”

“DDN has deep technical expertise and capabilities in high performance and at scale data environments, and is well positioned to build on and accelerate the success of the business,” said Phil Bullinger, senior vice president & general manager of the Data Center Systems business. “Importantly, both Western Digital and DDN are aligned in our commitment to executing a smooth transition for all stakeholders. Western Digital will remain one of the largest consumers of IntelliFlash products, and customers will continue to receive best-in-class service and support.”

The transaction is expected to close later this calendar year, subject to the satisfaction of customary closing conditions. Financial terms of the transaction were not disclosed. Western Digital’s intended exit of Storage Systems is expected to generate an annual non-GAAP EPS benefit of at least $0.20 starting in the fiscal 2020 third-quarter ending April 3, 2020. The company will also incur restructuring and other charges, which are not determinable at this time.