That is amazing. I think that Silver Lake and Texas Pacific paid around $2.1b when they took it private years ago, and most of that was debt and the cash that Seagate had on hand!
EDIT:
Here is an extended version of that article. It seems that the final buyout price won't be in the 20s, since there is 2.5b of debt to consider.
Bain Capital Mulls Joining Buyout Talks With Seagate
By GINA CHON And ANUPREETA DAS
online.wsj.com
Bain Capital LLC is seriously considering joining private-equity firms TPG Capital and Kohlberg, Kravis Roberts & Co. in their talks to take Seagate Technology PLC private in what could be a $10 billion to $12 billion deal, people familiar with the matter said.
Seagate, a big maker of computer disk drives, said Thursday it is in preliminary discussions with an unnamed suitor interested in taking the company private.
The company had a $6 billion market capitalization before it disclosed it was exploring a sale, which sent its stock up 22% Friday. Seagate's share were at $15.51 at 4 p.m. on the Nasdaq Stock Market giving it a market value of about $7.3 billion.
Silver Lake Partners and TPG—which took part in a 2000 transaction that took Seagate private—were in recent buyout discussions with Seagate that collapsed over differences in valuation, people familiar with the matter said. Silver Lake isn't involved in the current talks, these people said.
Because private equity deals currently require at least a 30% equity contribution, a buyout of Seagate would likely require at least three firms to contribute up to $4 billion. Seagate has about $2.5 billion of debt.
Obtaining financing to support a Seagate deal will likely not be an issue, especially since the high-yield debt market has been robust in recent weeks, and banks are vying to participate in the financing.
Seagate, based in Scotts Valley, Calif., said its board has hired Morgan Stanley & Co. and Perella Weinberg Partners to evaluate strategic alternatives, noting that there was no assurance it would receive a formal offer or any transaction would take place. It declined additional comment.
The company's decision to disclose the discussions at such a preliminary stage surprised some analysts. But Richard Kugele, who follows the company for Needham & Co., said the company's recent reincorporation in Ireland subjected Seagate to rules requiring early disclosure of such developments.
Read more: online.wsj.com |
