Seagate Bidders’ Offers Fell Short, CEO Luczo Says
(Corrects first paragraph of Jan. 7 story to show investors were shy part of the equity needed.)
Seagate Technology Plc Chief Executive Officer Steve Luczo said offers from potential acquirers of his company were shy some of the at least $3.5 billion in equity needed to make a deal worthwhile.
The world’s largest maker of disk drives turned down an offer of more than $7.5 billion in November from TPG Capital. Scotts Valley, California-based Seagate also refused a proposal from competitor Western Digital Corp., two people familiar with the matter said last month. The amount of equity needed was about $3.5 billion to $4.5 billion, Luczo said.
“At the end of the day, we just felt we could deliver more value to the shareholders by staying public,” Luczo said today in an interview at the Consumer Electronics Show in Las Vegas. Bidders were reluctant to boost their offer because of concerns about the short-term economic environment, he said.
The company continues to innovate and is developing external devices that can connect to Apple Inc.’s iPad and other tablet devices to deliver music, video and other content, Luczo said. That leaves Seagate well-positioned even as more products like the iPad are using flash-memory storage instead of a hard disk, he said.
“I’ve never seen a time where if there are new devices that consume a great deal of rich data like video, that it’s not good for storage,” Luczo said.
Seagate, which has a stock market value of $6.84 billion, had $2.17 billion of debt as of Oct. 1, maturing between October 2011 and May 2020, according to its latest quarterly report. The company sold $750 million of bonds in a boosted offer in December, after rejecting the takeover bids, and announced plans to raise as much as $350 million in loans.
Seagate fell 29 cents, or 1.9 percent, to $14.47 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have dropped 20 percent in the past year, while the Nasdaq Composite Index has gained 18 percent.
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