Western Digital Corp (NASDAQ:WDC) disclosed its agreement to acquire Virident Systems, an enterprise flash and SSD storage solutions provider through its wholly owned subsidiary HGST for $685 million in cash.

Western Digital

According to the company, the transaction represents $645 million in enterprise value, net of the estimated cash balance of Virident. Western Digital Corp (NASDAQ:WDC) ended its June quarter with $2.35 billion net cash.

The acquisition will help the company expand its presence in the SSD market

Western Digital Corp (NASDAQ:WDC) emphasized that the acquisition will help the company expand its presence in the SSD market further. The company noted that based on the projection of the IDC, the enterprise SSD market revenue will increase from $2.5 billion to $7 billion by 2017.

The company emphasized that Virident’s technology is one of the fastest growing segments in enterprise and cloud computing. Its solutions allow enterprises to perform intensive data center application with PCIe-based enterprise flash storage solutions for virtualization, database, cloud computing, and webscale applications.

Virident’s intelligent storage software will improve the value of HGST

Western Digital Corp (NASDAQ:WDC) said Virident’s intelligent storage software will improve the value of HGST solutions. Virident will be able to expand its go-to market initiatives rapidly by integrating HGST solutions and taking advantage of its strong brand, extensive channel relationships, and global customer reach.

Steve Milligan, president and chief executive officer of Western Digital Corp (NASDAQ:WDC) said, “We have established a competitive position in the enterprise SSD space and with our recently announced acquisitions we are increasing our commitment to become an even more significant player in this high growth segment.”

On the other hand, Mike Cordano, president of HGST stated, “The Virident acquisition is a continuation of HGST’s strategy to address customers’ rapidly changing storage needs by delivering intelligent storage devices that tightly integrate hardware and software to maximize solution performance.” Virident CEO Mike Gustafson will report to Cordano after the closing of the transaction.

The deal is part of the strategy of Western Digital to expand its business

Meanwhile, analysts at Stifel noted that the deal is part of the strategy of Western Digital Corp (NASDAQ:WDC) to expand its business in the enterprise class SSD market after acquiring VeloBit and STec. According to them, Virident generated less than $50 million annualized revenue with no specific customer concentration from Flash Max II PCle SSD earlier this year.

Stifel analysts said the third generation Flash Max II PCle SSDs software-driven architectural approach is similar to the ioMemory solutions of Fusion-IO, Inc. (NYSE:FIO).

Stifel has a buy rating and $77 price target for the shares of Western Digital Corp (NASDAQ:WDC).