LOS ANGELES -- Tandon last week agreed to sell most of its disk-drive business to Western Digital in a deal valued at nearly $80 million.
The transaction would effectively remove Los Angeles-based Tandon from a business that made it one of the personal computer industry's best-known suppliers in the early 1980s. The company now will be primarily a personal computer manufacturer.
Western Digital, a fast-growing computer equipment maker headquartered in Irvine, Calif., agreed to pay between $40 million and $45 million in cash and equipment for Tandon's hard-disk drive operation. It also agreed to cover debts of $34 million that Tandon owes to its suppliers.
Disk drives are devices that accept and store data in personal computers.
The deal, which is expected to be completed early next year, reflects another sweeping move by Tandon's founder, chairman and chief executive, Sirjang Lal "Jugi" Tandon.
In an interview, Tandon acknowledged that the sale was largely intended to ease the company's financial strains as it expands further into personal computer manufacturing. As of Sept. 30, the company had only $8.6 million in cash.
For Western Digital, the deal broadens the product line of a company that mainly has made a type of circuit board that controls the storage and flow of data in personal computers. The company's sales rose more than 60 percent, to $462.5 million, in the year ended June 30.
Western Digital also has drawn attention by becoming one of the first companies to announce products for IBM's newest line of personal computers, the Personal System-2. In October, Western Digital also introduced a line of semiconductor products that duplicate the operations of IBM's so-called Micro Channel, a communications pathway inside some of IBM's new models. Duplicating the functions of the Micro Channel could be the key to the "cloning" the new generation of IBM machines, analysts said.
Western Digital Chairman Roger Johnson said his company wanted more control over the disk-drive business than it would have had in a joint venture with Tandon, which had also been disussed.
"We can probably have a lot more control over the design, manufacturing and quality if we do the whole thing ourselves," he said.
The disk-drive business is considered highly competitive. The more advanced drives, known as hard-disk drives, use rigid platters that are 3 1/2 inches or 5 1/4 inches in diameter.
Tandon, which flourished in the early 1980s selling floppy, or flexible, disk drives, has largely shifted into the manufacture of the more powerful 3.5-inch, hard-disk drives.
Tandon retains the rights to one disk-drive product, a removable drive that it launched and promoted with a publicity splash earlier this year, but which has had negligible sales.