Samsung Electronics Co said on Tuesday that it will sell its hard disk drive business to US-based Seagate Technology for $ 1.4 billion in cash and stock.

Under the agreement, Samsung will transfer the HDD business to Seagate and in return will get about a 9.6 per cent stake or 45.2 million shares in Seagate which is valued at $ 687.5 million, the two companies said in a joint statement.

Besides, South Korean firm will receive the remaining amount in cash, it added. The combined value of these transactions and agreements is about $ 1.37 billion.

As part of the deal, Samsung would also supply Seagate with NAND flash products for use in the US—based firm’s enterprise solid state drives. In addition, Seagate will supply drives for Samsung’s PCs.

NAND flash memory chips are used to store data in digital cameras and music systems. Besides, an executive of Samsung will be nominated to join Seagate’s Board of Directors.

“The transactions and agreements significantly expand Seagate’s customer access in China and Southeast Asia,” the two companies said.

“In addition, the mutual supply agreements enable Seagate to secure an important source of leading-edge NAND flash supply as the company expands its SSD and solid state hybrid product offerings, and position Seagate to be a more significant supplier of disk drives to Samsung.

The agreement also gives Samsung a significant ownership position in Seagate,” it added. The deal, subject to regulatory approvals, is expected to close by the end of this year.

Separately, Seagate Technology reported a net profit of $ 93 million in the quarter ended April 1, 2011 and revenue of $ 2.7 billion.

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