Seagate Buy Samsung’s Hard Drive Business

It looks like Seagate’s hard drive business got a little bigger with the acquisition of Samsung’s HDD division. There aren’t many hard drive companies left really are there? That can’t be good for competition can it? Seriously though, think about it? Where is the incentive to offer good prices when there isn’t any competition in the marketplace? Oh well, I guess there’s not much the average consumer can do about it.

seagatehdd

 

-Seagate Technology today announced the closing of the transaction to acquire the hard disk drive (HDD) business of Samsung Electronics Co., Ltd., a world leader in digital consumer electronics and information technology.

Under the terms of the transaction, Seagate has gained select elements of Samsung’s HDD business, including assets, infrastructure and employees that enable Seagate to drive scale and innovation. These assets include Samsung’s leading M8 product line of high-capacity, 2.5-inch HDDs. Samsung employees joining Seagate include a number of senior managers and design-engineering employees from Samsung’s Korea facility, who will focus on development of small form-factor products for the mobile compute market. N.Y. Park, senior vice president and general manager, will oversee Seagate’s product development activities in Korea and serve as country manager of the Korea design center, reporting to Bob Whitmore, Seagate’s executive vice president and CTO.

This transaction was announced in April 2011 along with a series of other agreements between Seagate and Samsung. Seagate is supplying disk drives to Samsung for PCs, notebooks and consumer electronics devices. Samsung is supplying its market-leading semiconductor products for use in Seagate’s enterprise solid state drives (SSDs), solid-state hybrid drives and other products. The companies have also extended and enhanced their existing patent cross-license agreement and have expanded cooperation to co-develop enterprise storage solutions.

The transactions and agreements substantially expand Seagate’s customer access in China, Southeast Asia, Brazil, Germany and the Russian Federation. Seagate and Samsung also have been working together to ensure that customers continue to receive a high level of service, support and innovation, including activities to align the two companies’ supply bases and delivery infrastructure. To ease the transition of products and technologies, Seagate will retain certain Samsung HDD products under the Samsung brand name for 12 months, and maintain or establish a number of independent operations including sales staff, key production lines and R&D. Customers can find more information at www.seagate.com/samsung.

The combined value of these transactions and agreements is approximately US $1.4 billion, consisting of 45,239,490 Seagate Ordinary Shares and the remaining balance settled in cash. In addition, Samsung will designate a nominee to join Seagate’s Board of Directors.

Seagate does not presently expect significant restructuring costs and expects to achieve considerable reductions in overall operating expenses for the combined business while minimizing the integration costs. As previously stated, Seagate expects that the transactions and agreements will be meaningfully accretive to non-GAAP diluted earnings per share and cash flow in the first full year following the closing. Seagate will provide additional financial information for the combined company on its fiscal second quarter conference call in late January.

About Seagate

Seagate is a world leader in hard disk drives and storage solutions. Learn more at www.seagate.com.

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