Apollo Provides Long-Term Strategic and
Capital Support to Company Alongside Existing Investor Elliott
Investment Management
Western Digital Corporation (“Western Digital”) (Nasdaq: WDC)
today announced that funds managed by affiliates of Apollo Global
Management, Inc. (“Apollo”) led the purchase of $900 million of
convertible preferred stock of Western Digital, along with Elliott
Investment Management L.P. (together with its affiliates,
“Elliott”) who also invested in the convertible offering. The
investment strengthens Western Digital’s financial position and
flexibility as the company continues its review of strategic
alternatives aimed at further optimizing long-term value for its
shareholders.
“This investment was the result of a comprehensive outreach and
evaluation process to appropriately capitalize the company and
retain optionality for future strategic decision making,” said
David Goeckeler, CEO, Western Digital. “We have tremendous respect
for Apollo and Elliott. Their partnership and perspectives as
experienced capital investors will help us facilitate the next
stages of Western Digital’s strategic review. We look forward to
working together in advancing our goal of creating value and
finalizing the best possible strategic outcome for our
shareholders.”
“Western Digital is an iconic American business that is critical
to the global digital infrastructure, with a strong, long-term
track record as a leading developer and producer of storage
technology,” said Reed Rayman, a Partner in private equity at
Apollo. “We see substantial opportunity and value creation ahead
for Western Digital and are excited to make this investment, which
enables Western Digital to continue executing on its innovation-led
strategy and producing market-leading products for its customers.
We look forward to working with David and the Board as they
position the company for long-term success.”
Elliott Managing Partner Jesse Cohn and Senior Portfolio Manager
Jason Genrich said, “We are pleased to participate in this
investment and are encouraged by the progress Western Digital has
made in its strategic review process to date. Our participation
follows our previous offer to provide strategic resources and
additional capital to help the company realize the full value of
both its HDD and Flash businesses. We are strong believers in
Western Digital’s compelling growth opportunity, and we look
forward to continuing our support for David and his management
team’s execution, strategic vision and focus on shareholder
value.”
In connection with the Apollo funds’ investment, Rayman was
appointed to Western Digital’s Board of Directors.
Western Digital will file a Form 8-K with the Securities and
Exchange Commission in regards to this investment.
Terms of the Transaction
The preferred stock has an initial conversion price of $47.75
per share of Western Digital’s stock, subject to customary
anti-dilution and other adjustments. The initial conversion price
of $47.75 represents a 25% premium to the volume-weighted average
closing price of the common stock over the 20-day period ending on
January 30, 2023, and a 44% premium to the closing price on January
4, 2023, the last trading day prior to merger rumors involving
Western Digital. The preferred stock will bear a cumulative and
compounding dividend at a rate of 6.25% per annum over the initial
liquidation preference of $1,000.00, until the seven-year
anniversary of the closing, at which time the dividend shall
increase to 7.25% per annum until the ten-year anniversary of the
closing, at which time the dividend shall increase to 8.25% per
annum. Additional information regarding this announcement may be
found in the Form 8-K.
Amendment to Western Digital/Elliott June 7, 2022 Letter
Agreement
Also announced today, Western Digital and Elliott revised their
June 7, 2022 letter agreement to provide Elliott with a board seat
right subject to certain conditions outlined in the Form 8-K.
Advisors
Qatalyst Partners, Lazard and J.P. Morgan are serving as Western
Digital’s financial advisors and Skadden, Arps, Slate, Meagher
& Flom LLP is serving as Western Digital’s legal counsel.
Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as
the Apollo funds’ legal counsel.
Gibson, Dunn & Crutcher LLP is serving as Elliott’s legal
counsel.
About Western Digital
Western Digital is on a mission to unlock the potential of data
by harnessing the possibility to use it. With Flash and HDD
franchises, underpinned by advancements in memory technologies, we
create breakthrough innovations and powerful data storage solutions
that enable the world to actualize its aspirations. Core to our
values, we recognize the urgency to combat climate change and have
committed to ambitious carbon reduction goals approved by the
Science Based Targets initiative. Learn more about Western Digital
and the Western Digital®, SanDisk® and WD® brands at
www.westerndigital.com.
About Apollo
Apollo is a global, high-growth alternative asset manager. In
the asset management business, Apollo seeks to provide its clients
excess return at every point along the risk-reward spectrum from
investment grade to private equity with a focus on three business
strategies: yield, hybrid, and equity. For more than three decades,
Apollo’s investing expertise across its fully integrated platform
has served the financial return needs of its clients and provided
businesses with innovative capital solutions for growth. Through
Athene, Apollo’s retirement services business, it specializes in
helping clients achieve financial security by providing a suite of
retirement savings products and acting as a solutions provider to
institutions. Apollo’s patient, creative, and knowledgeable
approach to investing aligns its clients, businesses it invests in,
its team members, and the communities it impacts, to expand
opportunity and achieve positive outcomes. As of September 30,
2022, Apollo had approximately $523 billion of assets under
management. To learn more, please visit www.apollo.com.
About Elliott
Elliott Investment Management L.P. manages approximately $55.7
billion of assets as of June 30, 2022. Its flagship fund, Elliott
Associates, L.P., was founded in 1977, making it one of the oldest
funds under continuous management. The Elliott funds' investors
include pension plans, sovereign wealth funds, endowments,
foundations, funds-of-funds, high net worth individuals and
families, and employees of the firm.
Forward-Looking Statements:
This press release contains forward-looking statements within
the meaning of federal securities laws, including statements
regarding the company’s review of strategic alternatives; growth
opportunities; market positioning; and strategy execution. The
company’s review of strategic alternatives may not result in a
separation of the company or any other transaction, and any
transaction that occurs may not increase shareholder value. The
forward-looking statements contained in this press release are
based on management’s current expectations and are subject to risks
and uncertainties that could cause actual results to differ
materially from those expressed or implied in the forward-looking
statements, including: volatility in global economic conditions;
future responses to and effects of the COVID-19 pandemic or other
similar global health crises; impact of business and market
conditions; the outcome and impact of our ongoing strategic review,
including with respect to customer and supplier relationships,
regulatory and contractual restrictions, stock price volatility and
the diversion of management's attention from ongoing business
operations and opportunities; impact of competitive products and
pricing; our development and introduction of products based on new
technologies and expansion into new data storage markets; risks
associated with cost saving initiatives, restructurings,
acquisitions, divestitures, mergers, joint ventures and our
strategic relationships; difficulties or delays in manufacturing or
other supply chain disruptions; hiring and retention of key
employees; our level of debt and other financial obligations;
changes to our relationships with key customers; disruptions in
operations from cybersecurity incidents or other system security
risks; actions by competitors; risks associated with compliance
with changing legal and regulatory requirements and the outcome of
legal proceedings; and other risks and uncertainties listed in the
company’s filings with the Securities and Exchange Commission (the
“SEC”), including the company’s Form 10-K filed with the SEC on
August 25, 2022, to which your attention is directed. You should
not place undue reliance on these forward-looking statements, which
speak only as of the date hereof, and the company undertakes no
obligation to update or revise these forward-looking statements to
reflect new information or events, except as required by law.
©2023 Western Digital Corporation or its affiliates. All rights
reserved. Western Digital, the Western Digital design, the Western
Digital logo, are registered trademarks or trademarks of Western
Digital Corporation or its affiliates in the US and/or other
countries.
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version on businesswire.com: https://www.businesswire.com/news/home/20230131006051/en/
Media Contact Lisa Neitzel Western Digital Public
Relations 1-408-717-7607 lisa.neitzel@wdc.com
Investor Contact T. Peter Andrew Western Digital Investor
Relations 1-949-672-9655 peter.andrew@wdc.com
For Apollo Noah Gunn Global Head of Investor Relations
Apollo Global Management, Inc. (212) 822-0540 IR@apollo.com
Joanna Rose Global Head of Corporate Communications Apollo
Global Management, Inc. (212) 822-0491
Communications@apollo.com
For Elliott Stephen Spruiell Elliott Investment
Management L.P. (212) 478-2017 sspruiell@elliottmgmt.com
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