Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Seagate Technology - Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Z Analyzer who wrote (1555)	3/30/2000 8:07:00 PM
From: Struggling Investor	Respond to of 1989

lastly, want to share this interesting article from Bloomberg: Seagate Shares Fall as Investors Criticize Buyout (Update3) By Loren Steffy Seagate Shares Fall as Investors Criticize Buyout (Update3) (Adds details on shareholder lawsuit.) Scotts Valley, California, March 30 (Bloomberg) -- Seagate Technology Inc. shares fell 10 percent as some shareholders said the $2 billion an investment group is paying to take the No. 1 maker of computer disk drives private is too little. Seagate fell 7 1/2 to 66 1/2 in composite trading. The shares had risen as high as 75 7/16, just shy of a record 76, when Seagate unveiled its plans to go private after the close of regular U.S. trading yesterday. The transaction calls for Veritas Software Corp., which is one-third owned by Seagate, to repurchase its stake valued at $18 billion. An investment group that includes the Roger McNamee's California venture-capital firm Silver Lake Partners, financier David Bonderman's Texas Pacific Group and Seagate management will pay an additional $2 billion for Seagate's disk-drive business. ``It's really a sweetheart deal for the management and the underwriters,' said Phil Foreman, manager of the $1.6 billion Evergreen Growth & Income Fund, which owns 973,000 Seagate shares. Veritas shares rose 2 3/4 to 145 1/4. Dane Lewis, a Robertson Stephens & Co. analyst who rates Scotts Valley, California-based Seagate a ``buy,' said the disk- drive business has an estimated value of $5 billion to $6 billion. The company reported 1999 sales of $6.8 billion. Seagate shareholders will receive $77.50 a share in the buyout, consisting of about 0.467 Veritas share and $5 in cash. Foreman said Seagate, whose business is recovering after a long slump, is valued at $95 a share. ``They've got to get shareholder approval, and I've got a feeling it could be tough,' he said. ``I'd be surprised if all the Seagate shareholders are happy. I know we're not.' Shareholders already have begun filing suit over the transaction. In one of seven lawsuits filed in Delaware Chancery Court in Wilmington today, Seagate shareholder Andrea Brown contends the price public stockholders would get is too low, and that Seagate directors are letting Veritas buy back its shares at an unfair, bargain price. ``The purpose of the plan is to enable (directors) to acquire 100 percent ownership of Seagate's assets for their own benefit and at the expense of the other Seagate stockholders,' Brown says in the suit. She asks that Seagate be sold to the highest bidder, and that shareholders be awarded damages and fees. The company expects the transaction to close in the third quarter pending approval of Seagate and Veritas shareholders. Seagate management doesn't own a controlling interest. Nicholas Moore, a senior equity analyst for Jurika & Voyles Inc. in Oakland, California, said he expects the $2 billion buyout price will be increased. ``That's highway robbery at this price,' said Moore, whose company recently sold most of its 1.65 million Seagate shares. ``There's $8 a share more that should be in the price.' Moore said adjusting the cash payment from the buyout wouldn't affect the structure of the entire transaction, which he said is ``the right thing' for both Seagate and Veritas. ``This is the only deal that could have happened,' he said. Improving Fortunes? Seagate's shares have more than doubled since late October on higher prices and demand for disk drives and on the company's cost- cutting program. ``The outlook clearly will be better and better each quarter this year,' said Jim Porter, president of Disk/Trend Inc., a Mountain View, California market-research firm. Since 1997, disk-drive makers battled for market share by cutting prices, even though the industry had too much capacity. The disk-drive market improved after companies reduced capacity and prices rebounded, Porter said. Seagate President Stephen Luczo said the company's board had studied ways for several months to unlock the value of Seagate's portfolio without having to pay taxes on the transaction. No one else came forward to buy the company, he said. Seagate's investments include data-storage company SanDisk Corp., network-equipment maker Gadzoox Networks Inc. and CVC Inc., which supplies equipment used to make magnetic recording heads for disk drives. Based on filings Seagate made at the end of last year, those stakes would be worth about $1.62 billion at yesterday's closing prices. Seagate also holds 35.6 percent of Dragon Systems Inc., a maker of speech-recognition products, which Lernout & Hauspie Speech Products NV said this week it will buy for $593 million in stock, valuing Seagate's stake at about $211 million. Under the transaction, Veritas will acquire all of Seagate's investments.