Seagate May Be Mulling Over Becoming Private Company Again

Seagate Held Talks with Previous Private Owners

by Anton Shilov
09/23/2010 | 05:53 PM

Seagate Technology, one of the world's largest makers of hard disk drives (HDDs), has reportedly negotiated with its previous private owners over potential buyout. The sides did not reach agreement over price and the deal is unlikely to happen, it is noteworthy that Seagate wanted to become private again and was searching for potential investors.


The talks between Seagate, Texas Pacific Group (TPG) Capital and Silver Lake were held in recent weeks and have already ended. The deal, which would have been valued at about $7 billion, is unlikely to happen, according to sources of Bloomberg news-agency. Since Seagate was not meeting some of the financial projections that the two financial companies based their deal on, the negotiations did not result in another takeover of Seagate because of disagreements over price.

“The personal computer market is going to have a weak finish to the year and the market for hard drives is oversupplied, so there’s margin and price pressure,” said Ashok Kumar, an analyst at Rodman & Renshaw LLC.

While all leading makers of hard drives had a tough period due to the world economic crisis, at this point the situation is much easier for them. Even though Seagate has lost its  HDD unit share leadership, the company still earns more than anyone in the hard drive storage industry. In any case, the turmoil days are more or less over for Seagate.

The reason why Seagate wanted to become private company once again remains unclear. In the year 2000 the company was undergoing a huge reorganization and actually needed financial support and stability. At present Seagate executes more or less efficiently, even though its stock has been decreasing since January, 2010, mostly due to overall business conditions. But maybe this is the time for another reorganization of Seagate? In the coming years the company will face changing world, where solid-state drives and cloud services will play more and more important roles. Perhaps, the company needs another tangible reshape and in order to free the hands of executives, it wants have stable financial backing from private-equity firms?