Seagate Hard Drives a Bargain with Samsung
Seagate Technology announced purchased the hard drive division of Samsung Electronics Co for around $1.4 Billion in cash and stock.
In a joint statement, the companies said "...The transactions and agreements significantly expand Seagate's customer access in China and Southeast Asia... 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 (solid state drive)... and positions Seagate to be a more significant supplier of disk drives to Samsung...".
This comes right on the heels of another even larger acquisition, when Western Digital Corporation bought the entire hard drive division from Hitachi Ltd for $4.3 Billion.
Under the terms of the agreement, Samsung will receive consideration consisting of 50 percent Seagate ordinary shares and 50 percent cash. Upon closing, Samsung will receive Seagate ordinary shares valued at $687.5 million (45.2 million shares, or approximately 9.6 percent ownership of Seagate, which is based on Seagate’s 30-day volume weighted average stock price prior to signing), plus $687.5 million in cash. Samsung will have a right to designate a nominee to join Seagate’s Board of Directors following closing.
This multi-billion dollar chess game ultimately serves a purpose, which is to help Seagate compete with Western Digital. Competition in the tech world is particularly fierce, especially as these two giants, as each company wants their hard drives to be in the computers, laptops, and other tech devices everyone uses.
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