Seagate to acquire disk drive test company
Last Updated: 16:45 December 26, 2013
Cupertino, California-based Seagate (Nasdaq: STX) will acquire all outstanding shares of Xyratex Ltd. (Nasdaq: XRTX), based in Havant, Hampshire, United Kingdom, in a transaction valued at $13.25 per share plus approximately $80 million in cash on Xyratex's balance sheet as of Aug. 31. The stock purchase represents a premium of about 27 percent per share over Xyratex's stock price at the close of trading on Friday, Dec. 20.
A Seagate press release said the company would operate Xyratex as a stand-alone entity. No one was available for comment at Seagate's operations in Longmont, where about 1,250 people are employed.
Xyratex has developed a hard disk drive capital test equipment business. The Seagate press statement said the acquisition will further strengthen Seagate's supply and manufacturing chain for disk drives and ensure uninterrupted access to capital equipment. The acquisition also expands Seagate's storage-solutions portfolio by adding Xyratex's enterprise data storage systems and computing business, the statement said.
"This is a strategically important acquisition for Seagate as we continue to focus on delivering best-in-class storage solutions for our customers," said Dave Mosley, president of operations and technology at Seagate, in the press statement. "As the average capacity per drive increases to multi-terabytes, the time to test these drives increases dramatically. Therefore, access to world-class test equipment becomes an increasingly strategic capability."
Baker Street Capital, Xyratex's largest shareholder, has agreed to vote its shares in favor of the transaction, which is expected to close in mid-2014.
Allen & Co. LLC served as financial adviser and Wilson Sonsini Goodrich & Rosati served as primary legal adviser to Seagate in connection with the transaction. Credit Suisse served as financial advisor and Latham & Watkins LLP served as legal advisor to Xyratex.
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