The subsidiary, Hitachi Global Storage Technologies (Hitachi GST), was established in 2003 after Hitachi acquired the HDD business from IBM.

Under a contract concluded Monday, Western Digital will buy all shares of Hitachi GST's holding company, Viviti Technologies Ltd., in a cash and stock transaction, Hitachi said in a press release.

Western Digital will repay Hitachi with $3.5 billion in cash and its 25 million common shares currently valued at some $750 million, the statement said.

As a result, the Japanese high-tech giant will own about 10 percent of Western Digital shares and be given two seats on the US firm's board of directors.

The transaction is expected to be completed by late September, the statement said.

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