Seagate completes its acquisition of Samsung's hard disk division
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Dec. 20, 2011
Seagate said earlier this morning that it has completed its acquisition of Samsung's hard disk drive division.
Seagate has gained Samsung’s Spinpoint MP4 and M8 line of 2.5 in. HD drives and a R&D facility in South Korea.
Samsung employees joining Seagate include a number of senior managers and design engineers from the South Korean
facility, who will focus mainly on the development of small form-factor products for the tablet market.
This transaction was announced in April of this year along with a series of other agreements between Seagate and
Samsung. Seagate is supplying disk drives to Samsung for PCs, notebooks and consumer electronics devices.
In turn, Samsung is supplying flash chips for use in Seagate’s enterprise solid state drives (SSDs), solid-state
hybrid drives and other products. The two companies have also extended and enhanced an existing patent cross-licencing
agreement and increased their cooperation to co-develop enterprise storage products.
All this is said to substantially expand Seagate’s customer access in China, Southeast Asia, Brazil, Germany and
Russia.
Seagate's CEO Steve Luczo said that his company and Samsung have aligned their product development efforts to get
new products to market faster.
Under the deal, Seagate will retain 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.
Overall, Samsung has three 2.5-inch products:
Spinpoint MP4 7,200 rpm, up to 640 GB, 2-platter notebook drive
Spinpoint M8 5,400 rpm, up to 1 TB, 2-platter notebook drive
S3 Portable 3.0 5,400 rpm, up to 640 GB external drive, contains an MP4 disk
Seagate's 2.5-inch product line is much more extensive:
Savvio 10,000 rpm, up to 900 GB, 3-platter, enterprise tier-1 drive
Constellation 7,200 rpm, up to 1 TB, 4-platter, enterprise tier-2 drive
Momentus 7,200 rpm, up to 750 GB, 2-platter notebook drive
Momentus 5,400 rpm, up to 750 GB, 2-platter notebook drive
Momentus Thin 5,400 rpm, 320 GB, 1-platter notebook/ultrabook drive
Momentus XT 7,200 rpm, 750 GB + 8 GB flash, 2-platter hybrid notebook drive
FreeAgent GoFlex 5,400 rpm, up to 1.5 TB external drives
The MP4 overlaps with the Momentus 7.2K and will disappear, possibly quite soon. The M8 has more advanced technology
than the Momentus 5.4K and that technology will probably be used in a future Momentus 5.4K line although the SpinPoint
M8 brand will likely go away after 12 months.
Calendar year 2010 revenue for Samsung’s HDD business was approximately $3.1 billion with some 66 million drives
shipped, but Seagate may not retain the whole amount of this revenue due to customers rebalancing HDD purchases from
suppliers.
The combined value of these transactions and agreements is approximately $1.4 billion, consisting of 45,239,490 shares
of Seagate common stock and the remaining balance settled in cash. Samsung will designate a nominee to join Seagate’s
board of directors.
Seagate doesn't expect significant restructuring costs and expects to achieve significant reductions in overall
operating expenses for the combined business.
Meanwhile, Western Digital expects to close its Hitachi GST purchase transaction in March. This delay is a concern,
according to a Wall Street Journal report, to Hiroaki Nakanishi, Hitachi's president, as there could be further hold-ups
because approval for the deal from all the international regulators involved, such as the Chinese, has yet to be obtained.
Source: Seagate.
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