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Seagate completes acquisition of Samsung's HDD business

The deal recently got approval from China, Australia, and the European Commission

By John Ribeiro
December 20, 2011 01:57 AM ET

IDG News Service - Seagate Technology said Tuesday it has completed the acquisition of the hard disk drive (HDD) business of Samsung Electronics, after it recently received approval for the deal in Australia, China, and the European Commission.

Seagate said in April that it was acquiring the HDD business of Samsung Electronics for US$1.4 billion in stock and cash.

Under the terms of the transaction, Seagate said it has gained parts of Samsung's HDD business, such as Samsung's M8 product line of high-capacity, 2.5-inch HDDs, and other assets, infrastructure and employees.

Samsung employees joining Seagate include a number of senior managers and design engineers from Samsung's South Korea facility, who will develop small form-factor products for the mobile computing market, Seagate said.

N.Y. Park, senior vice president and general manager, will oversee Seagate's product development activities in South Korea and serve as country manager of the local design center, reporting to Bob Whitmore, Seagate's executive vice president and chief technology officer, it said.

In 2010, HDD shipments from both Seagate and Samsung added to 261.2 million units, giving the combined companies 40 percent of the HDD market, IHS iSuppli analyst Fang Zhang said in May in a blog post. Western Digital and Hitachi Global Storage Technologies still held the number one position with a 50 percent share.

The market shares are likely to change dramatically in this quarter and early next year after the Thailand floods halted production at the facilities of Western Digital in the country, though the supply chain to Seagate's factories in the country was also affected.

The projected loss of shipments for Western Digital could prove a boon in the short term for Seagate Technology and boost the number two HDD player to the top after trailing Western Digital in total shipments for several quarters, IHS iSuppli said in November.

Western Digital said in March that it would buy Hitachi Global Storage Technologies for $4.3 billion in cash and stock. The acquisition is expected to close by March next year, as the company works to satisfy European Commission remedy provision, and obtains approvals from other regulatory authorities.

Seagate said it is retaining certain Samsung HDD products under the Samsung brand name for 12 months, and maintain or establish a number of independent operations including sales staff, key production lines and R&D (research and development). Some of these moves are likely to be linked to conditions imposed by China's Ministry of Commerce for approving the merger, including requiring Seagate to expand the production capacity of Samsung drives for six months, and selling Samsung's HDD products through an independent company.

The Australian Competition & Consumer Commission approved the acquisition last week.

Seagate and Samsung have also extended and enhanced their existing patent cross-license agreement, and have expanded cooperation to co-develop enterprise storage solutions.

Under the terms of the agreement in April, Seagate is supplying disk drives to Samsung for PCs, notebooks and consumer electronics devices, while Samsung is supplying semiconductor products for use in Seagate's enterprise solid state drives (SSDs), solid-state hybrid drives and other products.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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