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M&A Monday: Western Digital Lands in the Spotlight

Another Monday, another acquisition.

This time, Western Digital landed front and center after the company inked a deal that not only puts it in the spotlight but also the hot seat.

What went down?

The company announced plans to buy Hitachi’s hard disk drive business for $4.3 billion. The moves makes Western Digital the world's largest storage maker.

Although investors cheered the move, it doesn’t come without a few headaches. The creation of such a dominant industry force could invite antitrust scrutiny.

However, John Coyne, Western Digital chief executive, told CNBC news partner the Financial Times that the deal should not give rise to competition concerns. “The remaining three competitors are very large, very capable and in sound financial shape, and Toshiba and Samsung are hard drive divisions of very large corporations,” he said.

Just how much scrutiny the deal draws and what it does to share price remains to be seen. However the impact on rivals is immediately apparent.

Shares of Seagate Technology jumped on the news with investors betting the deal could remove excess production capacity and halt a price war that had crippled margins. Meanwhile, shares in flash memory supplier Micron slipped as investors pondered a new, and much larger, rival in the U.S. market.

How should you position now?

Despite the sharp gains in Western Digital, "we've still got a company that's trading below 4 times enterprise value to EBITDA," says Stifel Nicolaus analyst Aaron Rakers in a live interview on CNBC's Fast Money. "We see a pretty attractive stock here that should trade into the $40 range," he says.

Check out our entire conversation with Rakers. Watch the video now!

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Trader disclosure: On March 7, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (AAPL); Seymour owns (BAC); Seymour owns (F); Seymour owns (GE); Seymour's firm is short (FCX); Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Adami's wife works for (MRK); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (MDY); Finerman's Firm is short (XRT); Finerman's Firm is short (IJR); Finerman's Firm Is Long S&P Puts; Finerman's Firm Is Long Russell 2000 Puts; Finerman's Firm And Finerman Own (AAPL); Finerman's Firm Owns (BAC) Leap, Finerman Owns (BAC); Finerman's Firm Owns (BBY); Finerman's Firm And Finerman Own (BP); Finerman owns (C); Finerman's firm owns (FDO); Finerman owns (GM) leaps; Finerman Owns (GOOG); Finerman's Firm And Finerman Own (HPQ); Finerman's Firm Owns (IBM); Finerman's Firm Owns (JPM), (JPM) Leap; Finerman Owns (JPM); Finerman's firm owns (M); Finerman's Firm And Finerman Own (MSFT); Finerman's Firm Owns (WMT); Terranova owns (VRTS); Terranova owns (C); Terranova owns (UPL); Terranova owns (ABT); Terranova owns (MS); Terranova owns (PBR); Terranova owns (BAX); Terranova owns (TEVA); Terranova owns (CVI); Terranova owns (RSX); Terranova owns (SU); Terranova owns (CNQ)

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For Brian Kelly
Accounts Managed By Kanundrum Capital Are Long Oil
Accounts Managed By Kanundrum Capital Are Long Gold
Accounts Managed By Kanundrum Capital Are Long Silver
Accounts Managed By Kanundrum Capital Are Long U.S. Bonds
Accounts Managed By Kanundrum Capital Are Long The Euro
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For Aaron Rakers
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