LONDON – Hard disk drive maker Seagate Technology plc is going to take over the HDD business of Samsung Electronics Co. Ltd. paying $1.375 billion in 50:50 cash and stock mix.
This will result in Samsung having about a 9.6 percent ownership stake in Seagate and Samsung will get to nominate one of its executives to join the Seagate board of directors.
Under the terms of the proposed deal, expected to close by the end of 2011, Samsung will provide NAND flash memory to Seagate for use in solid-state drives (SSDs) and hybrid drives while Seagate will provide disk drives to Samsung for use in personal computers, notebooks and consumer electronics.
At the same time the two companies have agreed to extend and enhance an existing patent cross-license agreement.
In addition the strategic nature of the alliance with Samsung means that Seagate expects to strengthen its relationship with SAE Magnetics (H.K.) Ltd., a subsidiary of TDK Corp.
"We are pleased to strengthen our strategic relationship with Samsung in a way that better aligns both companies around technologies and products," said Steve Luczo, Seagate chairman, president and CEO. "With these agreements, we expect to achieve greater scale and deliver a broader range of innovative storage products and solutions to our customers, while facilitating our long-term relationship with Samsung."
The deal is expected to expand Seagate's customer access in China and Southeast Asia. Upon closing, Samsung will receive Seagate ordinary shares valued at $687.5 million, equivalent to 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.
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