Western Digital Corp. (WDC), the largest maker of computer hard-disk drives, agreed to buy a rival unit of Hitachi Ltd. (6501) for about $4.3 billion in cash and stock to reduce costs as the industry shrinks amid waning demand.

Western Digital will pay $3.5 billion in cash and give Hitachi 25 million of its shares, according to a statement from the companies today. Hitachi will own about 10 percent of Irvine, California-based Western Digital after the deal is completed and will gain two seats on the company’s board.

The deal will combine the largest and third-largest makers of hard-disk drives, as measured by IHS ISuppli. Demand for the products is falling amid rising popularity of tablet computers, which use other types of storage. If completed, the deal would be the largest for a memory-device company in at least five years, according to Bloomberg data.

Source : Bloomberg