U.S.-based hard drive manufacturer Western Digital Corp. announced that China's Unisplendour Corporation has cancelled the USD3.775 billion investment agreement it originally reached in September 2015.
According to the agreement, Unisplendour and its fully-owned subsidiary UNIS Union Information System Limited would subscribe Western Digital's 40.815 million new shares at the price of USD92.5 per share and the total transaction value would reach USD3.775 billion, which is about CNY24 billion. If the transaction was completed, Unisplendour would hold a 15% stake in Western Digital, making it the largest shareholder of the latter.
However, the transaction was aborted due to the intervention of Committee on Foreign Investment in the United States. Unisplendour received a written notice from CFIUS, stating that the committee intended to open an investigation into the investment. Based on the agreement between Unisplendour and Western Digital, if the investment was not free from the investigation of CFIUS, either party could unilaterally terminate the agreement. Therefore, Unisplendour's board decided to cancel the investment, as they appeared afraid of the eventual findings.
In spite of the investment cancellation, the joint venture project of the two parties will proceed on schedule. In November 2015, Unisplendour and Western Digital announced plans to establish a joint venture, with USD80.58 million investment from Unisplendour and USD77.42 million investment from Western Digital.