Seagate Technology Buyout - Case Study Question 1: Why is Seagate undertaking this transaction? Is it necessary to divest the Veritas shares in a separate transaction? Who are the winners and losers resulting from the transaction? Answer: Seagate Technology was badly undervalued as far asSTOCK MARKET is considered, and due to this, the company decided to go for leverage buyout option. A large stake of VERITAS Software Corporation's stocks is owned by Seagate Technology, because of which
Words: 399 - Pages: 2
Seagate Technology Buyout March 22, 2006 By: Rachel Cluck Beth Crocker Heather Preston Jessica Seal Table of Contents Introduction............................................................................3 Objectives ..............................................................................3 Overview................................................................................4 Alternatives – How to Address Seagate’s Low Stock Price ..5 Do Nothing................................
Words: 8426 - Pages: 34
Electronic market- new growth segments Seagate Technology • Founded in 1979 • Designs, manufactures, and market a broad line of disk drives for use in computer systems for desktop PCs, workstations and servers, and supercomputers • Only major independent disk drive manufacturer to be fully vertically integrated o Higher R&D and capital expenses, therefore higher fixed costs o Gives a comparative advantage , can develop technologies “in- house” so wouldn’t have to depend
Words: 488 - Pages: 2
Seagate Technology Buyout I. INTRODUCTION In 1999, Seagate Technology, Inc., decided that in order to increase their market value, they needed to make some big changes. Due to their undervalued stock price, Seagate decided to undergo a leveraged buyout (LBO) with Silver Lake Partners L.P. During this time, four main concerns arose among the parties involved: • • • • How can Seagate address the company’s low stock price? How should the buyout be financed? What should the capital structure look
Words: 10741 - Pages: 43
Seagate Technology Buyout CASE SUMMARY In May of 1999, Seagate sold one of its companies, the Network & Storage Management Group (NSMG), to VERITAS in return for 155 million shares of VERITAS stock. The transaction made Seagate VERITAS’s largest stockholder, creating an ownership stake of over 40%. When a few problems regarding stock prices arose, concerned shareholders were not far behind. Following the transaction, the market was failing to recognize the value of Seagate’s stake in VERITAS, as
Words: 2328 - Pages: 10
Case 9 & 10 Analysis Seagate Technology Buyout The Hertz Corporation Advanced Corporate Finance MW 2:00-3:15 PM Question 1 On page 1, the “value-gap” is two-fold. It signifies an under-valuation of Seagate’s core disk drive operating assets due to unfavorable public market investor preferences. Furthermore, the value of the Veritas share price has caused the Veritas stake to far outweigh the value of Seagate’s stand-alone market capitalization. Since Seagate does not own at least 80%
Words: 1592 - Pages: 7
Seagate Technology Buyout This case looked at Silver Lake’s proposed leveraged buyout (LBO) of Seagate Technology Inc’s (Seagate) disk drive operations, followed by the tax-free acquisition of Seagate’s remaining assets by Veritas Software Corp (Veritas). The stock prices of the two firms varied greatly at the time with Veritas’ growing much more rapidly than Seagate’s, 200% versus 20% respectively. Executives believed that Seagate’s shares had become undervalued. In order to take advantage
Words: 478 - Pages: 2
As mentioned in the case, the stock value of Veritas has increased by over 200 % after the leveraged buyout of Seagate’s disk drive operations and the tax-free acquisition of Seagate’s remaining assets by Veritas Software Corporation. In Exhibit 5 it is shown that the stock price increased to 168,69 $/share in March 2000, while the stock price of Seagate Technology was 64,25 $/share at that time (Exhibit 3). Exhibit 4 shows the interesting development that starting in October 1999 the pre-tax value
Words: 626 - Pages: 3
Seagate Technology Buyout Case Analysis FNCE 601, Chenxi Zhu (00311724) September 28, 2015 Seagate was one of the world’s largest manufacturers of computer disk drives and related data storage devices. Besides the disk drive operations, Seagate’s main asset was a significant stake in Veritas’s common stock. The entire market capitalization of Seagate was approximately $14.6 billion (stock price: $64.25, shares outstanding: 227.2 million). However, the market value of the Seagate’s stake in Veritas
Words: 442 - Pages: 2
Mackenzie Hall Tel: 543-4379 E-mail: rhiggins@u.washington.edu Homepage: http://us.badm.washington.edu/higgins/ (From here you’re one click from the class page) Office Hours: M, W: 10:30 – 12:00 COURSE OBJECTIVE Capital Investment Planning is a case course examining corporate investment decisions and related issues in financial strategy. The course is intended as a continuation of Finance 552, Corporate Planning and Financing, and is suitable for generalists and finance specialists who seek a
Words: 3270 - Pages: 14
