News
 

Bookmark and Share

(0) 

Seagate Technology did not only cancel all the negotiations about going private with private equity firms, but also rejected a takeover proposal from its arch-rival Western Digital, according to market rumours. The combination could have created the world's largest maker of hard disk drives (HDDs) with over 60% market share, the Intel Corp. of the storage market.

TPG Capital, a private equity firm, reportedly offered Seagate's shareholders over $7.5 billion for the company, which was a more or less fair deal, given the market capitalization of around $6.5 billion in late November. But Western Digital proposed to pay 10% to 50% more than TPG, according to Bloomberg news-agency, which cites its sources with knowledge of the matter. 

The combination of Seagate and WD would have created the Intel of the hard drive industry with over 60% unit and value market shares, provided that the companies could integrate properly into each other. Unfortunately, the newly-formed company would have run into problems with antitrust organizations around the world and the consolidated HDD giant would have also experienced issues with overlapping product lines.

"There’s way too much product overlap, and I’m not sure the premium would be meaningful enough to make it worth it. I think they have to make a go of it on their own," said Ashok Kumar, an analyst at Rodman & Renshaw LLC.

In fact, consolidation of hard drive companies may not be the most important thing for manufacturers of hard drives. Solid-state drives (SSDs) are getting more affordable and suppliers of SSDs are getting more powerful. As a result, many of such companies can not only offer high-quality flash-based drives for enterprise customers, but also develop technologies that will make those SSDs even more reliable. This is a direct threat for lucrative enterprise HDD businesses of all the manufacturers. Moreover, as the demand towards personal computers increases, hard drive makers may need to concentrate on every-day management rather than on potential consolidation.

"The consolidation wave has run its course. The only thing that will keep pricing stable and profits moving in the right direction is more rational production levels," said Mr. Kumar.

Neither Seagate nor Western Digital commented on the news-story.

Tags: Seagate, Western Digital, WD, Business, HDD

Discussion

Comments currently: 0

Add your Comment




Related news

Latest News

Monday, July 21, 2014

12:56 pm | Microsoft to Fire 18,000 Employees to Boost Efficiency. Microsoft to Perform Massive Job Cut Ever Following Acquisition of Nokia

Tuesday, July 15, 2014

6:11 am | Apple Teams Up with IBM to Make iPhone and iPad Ultimate Tools for Businesses and Enterprises. IBM to Sell Business-Optimized iPhone and iPad Devices

Monday, July 14, 2014

6:01 am | IBM to Invest $3 Billion In Research of Next-Gen Chips, Process Technologies. IBM to Fund Development of 7nm and Below Process Technologies, Help to Create Post-Silicon Future

5:58 am | Intel Postpones Launch of High-End “Broadwell-K” Processors to July – September, 2015. High-End Core i “Broadwell” Processors Scheduled to Arrive in Q3 2015

5:50 am | Intel Delays Introduction of Core M “Broadwell” Processors Further. Low-Power Broadwell Chips Due in Late 2014