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IBM Corp.’s restructuring plan took a step forward Monday as the European Commission approved a $2.05 billion sale of the computer maker’s hard disk-drive business to Hitachi Ltd. The European Union’s antitrust regulator said the transaction, announced June 4, would make Tokyo-based Hitachi a top manufacturer of hard drives for mobile applications but would not stifle competition. U.S. antitrust regulators are expected to echo the Commission’s approval, analysts said. Closing is expected by Dec. 31. Several factors led to the Commission’s decision, it said. Hard drives are standardized, customers are large and sophisticated with multiple suppliers, and supply contracts are short in duration and nonexclusive. That means customers can easily shift among suppliers. Additionally, incumbent hard-drive manufacturers face relatively low barriers to enter the mobile sector of the industry, the Commission said. The deal is part of Armonk, N.Y.-based IBM’s push, also announced June 4, to lower operating expenses and shed slow-growing businesses. In addition to the pending sale of its hard drive unit, Big Blue has sold several divisions of its microelectronics division and said it would lay off 1,500 workers from the unit. The restructuring moves resulted in a cumulative $2.1 billion pre-tax charge in IBM’s second quarter. Under terms of the Hitachi-IBM deal, the Japanese electronics giant will fold the assets into a joint venture based out of its San Jose, Calif., drive manufacturing facility. Hitachi will initially own a 70 percent stake and will take full ownership in three years, with payments made in a series of fixed installments over the life of the agreement. Copyright �2002 TDD, LLC. All rights reserved.

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