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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (2457)11/30/2010 1:19:38 AM
From: richardred  Respond to of 6379
Seagate scotches plan to go private

Company spends $2bn buying own shares

Iain Thomson in San Francisco, 30 Nov 2010

Seagate has said that the company is no longer interested in a private buy out.

The storage vendor entered into talks with private equity firms last month with a view to taking the company private. An initial bid by TGP and Bain Capital was proposed, with Toshiba and Samsung also being considered as possible bidders for the world’s biggest hard drive company.

The talks fell through but a renewed attempt at a bid by TGP have reportedly collapsed and the company has said it is concentrating on continuing to expand rather than entering into an acquisition process.

“We appreciate the interest shown by the private equity firms and our dialogues with them were extensive and thoughtful,” said Steve Luczo, Seagate chairman.

“However, management and the Board have chosen to cease discussions concerning a private equity-led leveraged buyout. Given the strong debt markets, improving business conditions and other financing options, Seagate has initiated a plan to further optimize its capital structure to maximize shareholder returns.”

The company said that it would be buying $2bn of its own stock to enhance shareholder value. Shares fell by over five per cent in today’s trading.

Demand for hard drives has improved significantly the Seagate, with the market approaching 170 million units this December. Seagate expects revenue to be at least $2.7bn for its next quarter with gross margins at least 19.5 per cent.

“Reading between the lines, it sounds as though Seagate's potential suitor did not have as high an opinion of the company's worth as Seagate did itself. The result is a respectful brush-off by both sides, though I doubt they'll exchange Christmas cards this year,” Charles King, principal analyst at Pund-IT told

“The $2bn stock buyback