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October 14, 2010, 6:06 PM EDT
By Arik Hesseldahl and Aaron Ricadela
(Adds Seagate spokesman in sixth paragraph.)
Oct. 14 (Bloomberg) -- Seagate Technology Plc, the world?s largest maker of disk drives, said it?s in talks about a transaction that would take the company private, without naming the party involved. The shares rose 21 percent in late trading.
Morgan Stanley and Perella Weinberg Partners LP will serve as financial advisers and Wilson Sonsini Goodrich & Rosati and Arthur Cox are the legal counsel in the discussions, Scotts Valley, California-based Seagate said today in a statement.
The company held earlier talks with previous owners TPG Capital and Silver Lake about going private again, people with knowledge of the discussions said last month. Those meetings ended, and a deal, which would have been valued at about $7 billion, was unlikely to happen, said the people, who declined to be named because the discussions were private. The new discussions are no surprise, given the appetite for technology takeovers, said Rich Kugele, a Needham & Co. analyst in Boston.
?There is a lot of untapped value in the market, and private-equity funds in particular have raised a lot of money and they?re at the point where they need to invest it or give it back,? said Kugele, who rates Seagate a ?strong buy.? ?They rarely do the latter.?
Shares Jump
Seagate, valued at $6 billion, jumped $2.63 to $15.32 in extended trading. The shares, down 30 percent this year, dropped 6 cents to $12.69 earlier on the Nasdaq Stock Market. Western Digital Corp., the second-biggest disk-drive maker, also rose in late trading. Its stock climbed 8.7 percent to $32.05.
Brian Ziel, a spokesman for Seagate, declined to comment.
The earlier negotiations collapsed because Seagate wasn?t meeting some financial projections the two private-equity firms had based the deal on, said one of the people familiar with the situation. That led to a disagreement over price, the person said. Morgan Stanley, Deutsche Bank AG and Bank of America Corp. were advising and lending on the deal, the people said.
TPG, based in Fort Worth, Texas, and Silver Lake, based in New York and Menlo Park, California, agreed to buy Seagate in 2000 and took it public in 2002 for $12 a share.
Buyout firms have struggled to restart dealmaking after the global financial crisis froze credit markets in mid-2007, ending the biggest LBO boom in history. The firms pool money from investors to take over companies, financing the purchases mostly with debt, with the intention of selling them later for a profit.
TPG, along with Blackstone Group LP and Thomas H. Lee Partners LP, pursued an ultimately unsuccessful takeover of Fidelity National Information Services Inc. in May. The private- equity groups offered more than $15 billion for the company, people with knowledge of the deal said at the time.
--With assistance from Jason Kelly, Jeffrey McCracken, Cristina Alesci and Serena Saitto in New York. Editors: Nick Turner, Lisa Wolfson
To contact the reporters on this story: Arik Hesseldahl in New York at ahesseldahl@bloomberg.net; Aaron Ricadela in San Francisco at aricadela@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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(Adds Seagate spokesman in sixth paragraph.)
Oct. 14 (Bloomberg) -- Seagate Technology Plc, the world?s largest maker of disk drives, said it?s in talks about a transaction that would take the company private, without naming the party involved. The shares rose 21 percent in late trading.
Morgan Stanley and Perella Weinberg Partners LP will serve as financial advisers and Wilson Sonsini Goodrich & Rosati and Arthur Cox are the legal counsel in the discussions, Scotts Valley, California-based Seagate said today in a statement.
The company held earlier talks with previous owners TPG Capital and Silver Lake about going private again, people with knowledge of the discussions said last month. Those meetings ended, and a deal, which would have been valued at about $7 billion, was unlikely to happen, said the people, who declined to be named because the discussions were private. The new discussions are no surprise, given the appetite for technology takeovers, said Rich Kugele, a Needham & Co. analyst in Boston.
?There is a lot of untapped value in the market, and private-equity funds in particular have raised a lot of money and they?re at the point where they need to invest it or give it back,? said Kugele, who rates Seagate a ?strong buy.? ?They rarely do the latter.?
Shares Jump
Seagate, valued at $6 billion, jumped $2.63 to $15.32 in extended trading. The shares, down 30 percent this year, dropped 6 cents to $12.69 earlier on the Nasdaq Stock Market. Western Digital Corp., the second-biggest disk-drive maker, also rose in late trading. Its stock climbed 8.7 percent to $32.05.
Brian Ziel, a spokesman for Seagate, declined to comment.
The earlier negotiations collapsed because Seagate wasn?t meeting some financial projections the two private-equity firms had based the deal on, said one of the people familiar with the situation. That led to a disagreement over price, the person said. Morgan Stanley, Deutsche Bank AG and Bank of America Corp. were advising and lending on the deal, the people said.
TPG, based in Fort Worth, Texas, and Silver Lake, based in New York and Menlo Park, California, agreed to buy Seagate in 2000 and took it public in 2002 for $12 a share.
Buyout firms have struggled to restart dealmaking after the global financial crisis froze credit markets in mid-2007, ending the biggest LBO boom in history. The firms pool money from investors to take over companies, financing the purchases mostly with debt, with the intention of selling them later for a profit.
TPG, along with Blackstone Group LP and Thomas H. Lee Partners LP, pursued an ultimately unsuccessful takeover of Fidelity National Information Services Inc. in May. The private- equity groups offered more than $15 billion for the company, people with knowledge of the deal said at the time.
--With assistance from Jason Kelly, Jeffrey McCracken, Cristina Alesci and Serena Saitto in New York. Editors: Nick Turner, Lisa Wolfson
To contact the reporters on this story: Arik Hesseldahl in New York at ahesseldahl@bloomberg.net; Aaron Ricadela in San Francisco at aricadela@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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