Seagate Technology Terminates Private Equity Discussions And Announces Share Repurchase Authorization
Seagate Technology plc (NASDAQ:STX) today announced its board of directors terminated 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. As previously announced by Seagate on October 14, 2010, the company 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.”
Share Repurchase Authorization
Additionally, Seagate’s board of directors has authorized the company to repurchase up to an additional $2 billion of its outstanding ordinary shares. This new share repurchase authorization continues Seagate’s commitment to enhancing shareholder value.Seagate expects to fund the share repurchase through a combination of cash on hand, future cash flow from operations and potential alternative sources of financing. Share repurchases under this authorization may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, or by any combination of such methods. The timing and actual number of shares repurchased will depend on a variety of factors including the ordinary share price, corporate and regulatory requirements and other market and economic conditions. The share repurchase authorization may be suspended or discontinued at any time. Fiscal Second Quarter 2011 Business Outlook 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.
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