In May 1999, Seagate sold its software business to VERITAS Corp in a stock transaction. By undertaking this, Seagate became the largest VERITAS shareholder with over 40% stake. Small numbers of VERITAS’ outstanding shares, both in absolute terms and relative to the Seagate, created relative mispricing due to the increase in demand and decrease in supply. VERITAS' stock price appreciated dramatically but Seagate's stock price didn’t; as the result the market value of Seagate's VERITAS stake exceeded
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increase of about 75 million times over the RAMAC. In 2005 Toshiba introduced a new hard drive using perpendicular recording, which features a density of 179 Gbit/in².[1] Toshiba's experimental systems have demonstrated 277 Gbit/in², and in 2006 Seagate Technology demonstrated a drive with a 421 Gbit/in² density.[2] It is expected that perpendicular recording technology can scale to about 1 Tbit/in² at its maximum. [3] Compact Discs (CDs), another common storage media of the early 2000s, stores
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The Price of RAM And Hard Drive Storage Over The Past 30 Years The price and capacities of RAM and hard drive storage have come a long way in the past 30 years. Take for instance, in 1981 an 18MB hard drive cost $2500, today a 1TB hard drive costs $150. In 1990 RAM costs were $50 per MB and today one can purchase 2GB RAM for approximately $50. Observe the following table pertaining to hard drive cost vs GB capacity from 1980-2009: Table Source: iStockAnalyst Observe that there is a strong
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0 standard and its theoretical, blazing-fast throughput of 5 gigabits per second--as promised by the USB Implementers Forum (USB-IF)--will change your life for the better. And if our tests of four new USB 3.0 hard drives from Buffalo Technology, Iomega, Seagate, and Western Digital are indicative, the change will certainly be dramatic. USB 3.0's impressive speed is its raison d'être, part of its beauty is its backward compatibility with USB 2.0. You need a new cable and a new host adapter (or one of the
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Seagate Technology Buyout March 22, 2006 By: Rachel Cluck Beth Crocker Heather Preston Jessica Seal Table of Contents Introduction............................................................................3 Objectives ..............................................................................3 Overview................................................................................4 Alternatives – How to Address Seagate’s Low Stock Price ..5 Do Nothing................................
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Seagate Technology Buyout I. INTRODUCTION In 1999, Seagate Technology, Inc., decided that in order to increase their market value, they needed to make some big changes. Due to their undervalued stock price, Seagate decided to undergo a leveraged buyout (LBO) with Silver Lake Partners L.P. During this time, four main concerns arose among the parties involved: • • • • How can Seagate address the company’s low stock price? How should the buyout be financed? What should the capital structure look
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Seagate Technology Buyout This case looked at Silver Lake’s proposed leveraged buyout (LBO) of Seagate Technology Inc’s (Seagate) disk drive operations, followed by the tax-free acquisition of Seagate’s remaining assets by Veritas Software Corp (Veritas). The stock prices of the two firms varied greatly at the time with Veritas’ growing much more rapidly than Seagate’s, 200% versus 20% respectively. Executives believed that Seagate’s shares had become undervalued. In order to take advantage
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Main Points to include: Background of Disk Drive Industry: • Desktop, Enterprise, Mobile – main market segments o Slowing revenues, increased unit sales • Storage networking, Consumer Electronic market- new growth segments Seagate Technology • Founded in 1979 • Designs, manufactures, and market a broad line of disk drives for use in computer systems for desktop PCs, workstations and servers, and supercomputers • Only major independent disk drive manufacturer
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Seagate Technology Buyout - Case Study Question 1: Why is Seagate undertaking this transaction? Is it necessary to divest the Veritas shares in a separate transaction? Who are the winners and losers resulting from the transaction? Answer: Seagate Technology was badly undervalued as far asSTOCK MARKET is considered, and due to this, the company decided to go for leverage buyout option. A large stake of VERITAS Software Corporation's stocks is owned by Seagate Technology, because of which
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Seagate Technology Buyout CASE SUMMARY In May of 1999, Seagate sold one of its companies, the Network & Storage Management Group (NSMG), to VERITAS in return for 155 million shares of VERITAS stock. The transaction made Seagate VERITAS’s largest stockholder, creating an ownership stake of over 40%. When a few problems regarding stock prices arose, concerned shareholders were not far behind. Following the transaction, the market was failing to recognize the value of Seagate’s stake in VERITAS, as
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