Seagate to acquire Xyratex

NEW DELHI, INDIA: Seagate Technology plc and Xyratex Ltd, a leading provider of data storage technology, have entered into a definitive agreement under which Seagate will acquire all outstanding shares of Xyratex in an all-cash transaction valued at $13.25 per share, or a total of approximately $374 million, including approximately $80 million in cash on Xyratex's balance sheet as of August 31, 2013.

The consideration represents a premium of approximately 27 percent per share over Xyratex's stock price at the close of trading on December 20, 2013.

Xyratex has developed a leading hard disk drive (HDD) capital test equipment business. The acquisition of this business will further strengthen Seagate's vertically integrated supply and manufacturing chain for disk drives and ensure uninterrupted access to important capital equipment.

The acquisition also expands Seagate's storage solutions portfolio by adding Xyratex's industry-leading enterprise data storage systems and high-performance computing business. Seagate will operate this business as a standalone entity and will focus on opportunities to improve and expand the business.

The transaction has been approved by Xyratex's board of directors and is subject to customary closing conditions, including review by regulatory bodies and approval by Xyratex shareholders. Baker Street Capital, Xyratex's largest shareholder, has agreed to vote its shares in favor of the transaction. The transaction is currently expected to close in mid-calendar year 2014. Seagate expects to finance the transaction from existing cash balances and the transaction is not subject to any financing conditions.

Seagate currently expects the transaction to be neutral to Seagate's earnings per share in its fiscal year 2015. Seagate expects positive cash flow immediately following the transaction and expects revenue contribution to be between $500-$600 million in its fiscal year 2015.