Seagate Technology to Acquire Xyratex Ltd
December 23 2013 - 8:30AM
Business Wire
Strengthens Capital Integration Strategy with
Addition of Xyratex’s HDD Test Business
Expands Storage Portfolio with Acquisition of
Xyratex’s Storage Systems Business
Seagate Technology plc (NASDAQ: STX), a world leader in storage
solutions, and Xyratex Ltd (NASDAQ: XRTX), a leading provider of
data storage technology, today announced that they have entered
into a definitive agreement under which Seagate will acquire all
outstanding shares of Xyratex in an all-cash transaction valued at
$13.25 per share, or a total of approximately $374 million,
including approximately $80 million in cash on Xyratex’s balance
sheet as of August 31, 2013. The consideration represents a premium
of approximately 27% per share over Xyratex’s stock price at the
close of trading on December 20, 2013.
Xyratex has developed a leading hard disk drive (“HDD”) capital
test equipment business. The acquisition of this business will
further strengthen Seagate’s vertically integrated supply and
manufacturing chain for disk drives and ensure uninterrupted access
to important capital equipment. The acquisition also expands
Seagate’s storage solutions portfolio by adding Xyratex’s
industry-leading enterprise data storage systems and
high-performance computing business. Seagate will operate this
business as a standalone entity and will focus on opportunities to
improve and expand the business.
“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. “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. As a premier provider
of HDD testing equipment, Xyratex is an important partner and we
are excited to integrate these important capabilities which will
considerably streamline our supply and manufacturing chain for our
core HDD business. We are also pleased to acquire Xyratex’s storage
systems and high-performance computing business, which provides us
additional opportunities to serve our customers with a broader
array of storage solutions.”
“Xyratex is very pleased to become a part of Seagate’s
industry-leading organization,” said Ernie Sampias, Chief Executive
Officer of Xyratex. “Seagate shares our commitment to innovation
and the critical role that test plays in providing the best storage
products at the lowest possible cost. After a thorough strategic
review process in which we evaluated a wide range of alternatives,
the Xyratex Board of Directors determined that this all-cash
transaction with Seagate maximizes shareholder value through an
attractive premium, and also affirms the significant value that our
employees have created.”
The transaction has been approved by Xyratex’s Board of
Directors and is subject to customary closing conditions, including
review by regulatory bodies and approval by Xyratex shareholders.
Baker Street Capital, Xyratex’s largest shareholder, has agreed to
vote its shares in favor of the transaction. The transaction is
currently expected to close in mid-calendar year 2014. Seagate
expects to finance the transaction from existing cash balances and
the transaction is not subject to any financing conditions.
Seagate currently expects the transaction to be neutral to
Seagate’s earnings per share in its fiscal year 2015. Seagate
expects positive cash flow immediately following the transaction
and expects revenue contribution to be between $500-$600 million in
its fiscal year 2015.
Allen & Company LLC served as financial advisor and Wilson
Sonsini Goodrich & Rosati served as primary legal advisor to
Seagate in connection with the transaction. Credit Suisse served as
financial advisor and Latham & Watkins LLP served as legal
advisor to Xyratex.
About Seagate
Seagate is a world leader in hard disk drives and storage
solutions. Learn more at www.Seagate.com.
About Xyratex
Xyratex is a leading provider of data storage technology,
including modular solutions for the enterprise data storage
industry and hard disk drive (HDD) capital equipment for the HDD
industry. Xyratex enterprise data storage platforms provide a range
of advanced, scalable data storage solutions for the Original
Equipment Manufacturer and High Performance Computing communities.
As the largest capital equipment supplier to the HDD industry,
Xyratex enables disk drive manufacturers and their component
suppliers to meet today’s technology and productivity requirements.
Xyratex has over 25 years of experience in research and development
relating to disk drives, storage systems and manufacturing process
technology. Founded in 1994 in an MBO from IBM, and with
headquarters in the United Kingdom, Xyratex has an established
global base with R&D and operational facilities in North
America, Asia and Europe.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, each as
amended, including, in particular, statements about our plans,
strategies and prospects and estimates of industry growth for the
fiscal quarter ending December 27, 2013 and beyond. These
statements identify prospective information and include words such
as “expects,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “projects” and similar expressions. These
forward-looking statements are based on information available to
the Company as of the date of this press release and are based on
management’s current views and assumptions. These forward-looking
statements are conditioned upon and also involve a number of known
and unknown risks, uncertainties, and other factors that could
cause actual results, performance or events to differ materially
from those anticipated by these forward-looking statements. Such
risks, uncertainties, and other factors may be beyond the Company’s
control and may pose a risk to the Company’s operating and
financial condition. Such risks and uncertainties include, but are
not limited to: the uncertainty in global economic conditions, as
consumers and businesses may defer purchases in response to tighter
credit and financial news; the impact of the variable demand and
adverse pricing environment for disk drives, particularly in view
of current business and economic conditions; dependence on the
Company’s ability to successfully qualify, manufacture and sell its
disk drive products in increasing volumes on a cost-effective basis
and with acceptable quality, particularly the new disk drive
products with lower cost structures; the impact of competitive
product announcements; possible excess industry supply with respect
to particular disk drive products; and the Company’s ability to
achieve projected cost savings in connection with restructuring
plans. Information concerning risks, uncertainties and other
factors that could cause results to differ materially from the
expectations described in this press release is contained in the
Company’s Quarterly Report on Form 10-Q filed with the U.S.
Securities and Exchange Commission (the “SEC”) on October 29, 2013
and the Company’s Annual Report on Form 10-K filed with the SEC on
August 7, 2013, the “Risk Factors” section of which is incorporated
into this press release by reference. These forward-looking
statements should not be relied upon as representing the Company’s
views as of any subsequent date and the Company undertakes no
obligation to update forward-looking statements to reflect events
or circumstances after the date they were made.
SeagateBrian Ziel,
408-658-1540brian.ziel@seagate.comorXyratexBrad Driver,
510-687-5260brad_driver@xyratex.com
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