Seagate Confirms Intention to Become Private Company Again

Seagate in Talks with TPG, KKP Regarding Takeover

by Anton Shilov
10/14/2010 | 08:01 PM

Seagate Technology announced Thursday that it had received a preliminary indication of interest regarding a going private transaction. The information confirms earlier rumours about potential acquisition of Seagate, but this time the rumours point to other potential buyers.


Seagate said that the company was "in discussions with the party from whom it [had] received the indication of interest". Seagate's board of directors is reportedly evaluating the indication of interest and other strategic alternatives. According to Bloomberg news-agency, Seagate holds talks with Texas Pacific Group (TPG) and KKP over potential acquisition. Earlier Silver Lake investment company withdrew from the negotiations, according to reports; but it looks like TPG is still interested.

In case the deal between strategic investors as well as Seagate ends up, the latter will become a private company for the second time since 2000.

The reasons why Seagate wants to become a private company once again remain 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. On the other hand, it may be a good time for another reorganization of Seagate? Especially, when the company is undervalued for certain reasons? In the coming years the company will face majorly changing world, where solid-state drives and cloud services will play more and more important roles. Perhaps, the company needs another tangible reshape, and, which is likely, in order to free the hands of executives, it wants have stable financial backing from private-equity firms?

“There is a lot of untapped value in the market, and private-equity funds in particular have raised a lot of money and they’re at the point where they need to invest it or give it back. They rarely do the latter,” said Rich Kugele, an analyst with Needham & Co.

Seagate naturally stressed in its statement that there was no assurance that the company would receive a formal offer or that any transaction will take place.

Neither the company nor its representatives will be providing any additional comments regarding the preliminary indication of interest.