Toshiba, Fujitsu May Combine Hard-Disk Drive Units

Jan. 14 (Bloomberg) -- Toshiba Corp. and Fujitsu Ltd. are in final talks to combine their hard-disk drive businesses as the computer makers try to reduce costs, according to four people familiar with the discussions.

Toshiba, Japan’s biggest chipmaker, would have a majority stake in any joint venture, the people said. Fujitsu, a maker of chips, computers and software, is in discussions with several companies about its hard-disk drive business, spokesman Etsuro Yamada said.

Fujitsu shares surged as much as 8.6 percent and Toshiba gained on optimism a partnership may help the Tokyo-based companies improve margins and narrow the lead of the biggest makers of hard-disk drives for personal computers. The combined operations would have revenue of almost 700 billion yen ($7.8 billion), more than that of Samsung Electronics Co., the world’s fourth-largest manufacturer.

“The deal would be positive for both companies in that Fujitsu can jettison the money-losing unit and Toshiba can expand a potentially profitable business,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which manages $6.1 billion of assets.

An agreement may be reached by the end of this month, the people said.

“It’s true that we are in talks with Fujitsu on the matter, but nothing has been decided at the moment,” Keisuke Ohmori, a spokesman at Toshiba in Tokyo, said by telephone.

Fujitsu climbed 5.6 percent to 416 yen as of 10:42 a.m. on the Tokyo Stock Exchange, its biggest increase since Jan. 7. Toshiba rose 3.9 percent to 400 yen, compared with a 0.6 percent gain by the benchmark Nikkei 225 Stock Average.

Reported Purchase

Toshiba is in the final stages of discussions to buy Fujitsu’s hard-disk drive business for as much as 40 billion yen, Nikkei English News reported today, without saying where it obtained the information.

Toshiba held a 7.2 percent share of the $32.8 billion global market for hard drives in 2007, making it the fifth-biggest producer, followed by Fujitsu with 6.9 percent, according to data from iSuppli Corp. Seagate Technology, Western Digital Corp. and Hitachi Ltd. are the world’s top three makers, based on the data.