Seagate Technology PLC has terminated discussions about a private
equity-led buyout and instead has won board approval to buy back
$2 billion of its own shares.
Seagate terminated the discussions with private equity firms
regarding a going private transaction, "principally because it
determined that the indications of the valuation range were not
in the best interest of the company and its shareholders."
On October 14, 2010, Seagate had received a preliminary
indication of interest regarding a going private transaction and
its board of directors was in discussions with that party.
"We appreciate the interest shown by the private equity firms and
our dialogues with them were extensive and thoughtful," said
Steve Luczo, Seagate chairman and CEO. "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."
Additionally, Seagate?s board of directors has authorized the
company to repurchase up to an additional $2 billion of its
outstanding ordinary shares.
Seagate management believes that the demand for hard disk drives
has improved, and the current expectation for the total available
market in the December 2010 quarter is approaching 170 million
units. Additionally, supply and demand appear to be well
balanced, with the company?s inventory across all channels at or
below targeted levels.
As such, for the December 2010 quarter, the company expects
revenue to be at least $2.7 billion and gross margin as a percent
of revenue to be at least 19.5%.