The rumors are true.
As reports suggested two days ago, hard-drive maker Western Digital (WDC) will indeed acquire flash-memory maker SanDisk (SNDK) for about $19 billion. The deal values SanDisk common stock at $86.50 per share.
Western Digital CEO Steve Milligan will serve as chief executive officer of the combined company, and it will be headquartered in Irvine, Calif. SanDisk president Sanjay Mehrotra will join Western Digital’s board of directors.
My Fortune colleague Stacey Higginbotham wrote earlier this week that such a deal reflects ongoing consolidation in the enterprise hardware industry. She’s right. Western Digital made its name on the classic hard drive that whirrs and clicks and spins. That technology, which is decades old, has been largely replaced by solid-state memory—the chips with no moving parts that you’ll find in your smartphones and, increasingly, in your company’s data center.
The storage business has been for some time brutally competitive with declining average selling prices and volatile margins. Any change in market share could pose huge problems for a company in the mix. The storage business is also in the midst of a macro shift as mobile devices and cloud computing reshape the way we access and store information.
It was only a matter of time, then, before Western Digital might want to hitch its wagon to a new horse; this deal demonstrates that. In buying SanDisk, Western Digital doubles its addressable market, hops on a higher-growth business, and expands its sizeable patent portfolio. (More than 15,000 issued or pending worldwide between both companies.)
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