Seagate in Discussion to Become Private, Once More
Possible buyout by TPG Capital and KKR
This is a Press Release edited by StorageNewsletter.com on October 15, 2010 at 2:58 pmSeagate Technology plc has received a preliminary indication of interest regarding a going private transaction.
The company is in discussions with the party from whom it received the indication of interest, and its board of directors is evaluating the indication of interest and other strategic alternatives.
The company has retained Morgan Stanley & Co. Incorporated and Perella Weinberg Partners LP to provide financial advice and Wilson Sonsini Goodrich & Rosati and Arthur Cox as legal counsel. There is no assurance that the company will receive a formal offer or that any transaction will take place.
Neither the company nor its representatives will be providing any additional comments regarding the preliminary indication of interest.
Comments
Chairman, president and CEO of Seagate Steve Luczo is not a technical but a Wall Street guy.
Prior to joining Seagate in 1993 and replacing legendary Al Shugart as
CEO in 1998, Luczo was senior managing director of Global Technology
Group of Bear, Stearns & Co., an investment banking firm. He is the
opposite of president and CEO of main competitor WD, John Coyne, with a
bachelor’s degree in mechanical engineering from University College
Dublin that arrived at WD in 1983 to take charge of PCBA ops then COO to
head manufacturing.
You couldn't not imagine
Coyne doing what did or is trying to do Luczo:
- transferring the Seagate's headquarters in the Cayman Islands only for legal and tax purposes as it operates in California (since July 3, 2010, the firm has been incorporated in Ireland),
- transforming his company in a private one in 2000, being bought by Texas Pacific Group and Silver Lake Partners for $1.7 billion, along an overall curious and complicated $20 billion deal including Veritas Software and Suez Acquisition,
- then took it public again in December 2002, raising $870 million - At this time, writing about the IPO, The Moley Fool, who claims its mission is "to educate, enrich and amuse individual investors," choose a delightfully malicious title: "4 reasons Seagate sinks" -, and
- now trying to do once more the same LBO apparently with TPG Capital and Kohlberg Kravis Roberts, as reported by Bloomberg and others, after failing with TPG and Silver Lake Partners last month.
Seagate stock trading just halted following this press release after its shares soared 21%.
It's pure financial business that could be very lucrative for current Seagate's shareholders, including Luczo as it was the case for the first LBO - he received $35.5 million in deferred compensation in 2001 -. Here the acquirers are mainly interested by Seagate's strong free cash flow - cash and cash equivalents being $2.3 billion for last fiscal year ended July 2, 2010 - that could be used in a better way to expand the company by some investments or acquisitions, for example in SSDs where the firm has no significant market share.
Note that, on the contrary, other HDD manufacturer Hitachi GST is currently trying to go public.
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