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

To: Z Analyzer who wrote (1923)	8/30/2000 10:52:40 PM
From: Sam	Read Replies (1) \| Respond to of 1989

I just waded through the Yahoo Seagate and Veritas boards. Here is a post from the VRTS board (which is generally much more substantive than the SEG board these days) that is worth a read. My thanks to Intlbkr. SEC filing by: Intlbkr 8/30/00 8:22 pm Msg: 12930 of 12933 Today SEG filed a SC 13E3/A with the SEC. This is the second amended filing regarding the SEG/VRTS deal. This is presumably the formal documentation of discussions between SEG and the SEC and should enable the SEC to give the green light. I would expect proxies to follow in the very near future. Some items of note: 1. Timing. "We are working toward completing the leveraged buyout and the merger as quickly as possible. We hope to complete both the leveraged buyout and the merger during the fourth calendar quarter of 2000." 2. Updated tables of the compensation SEG shareholders would receive under the three cash retention scenarios by VRTS and at various VRTS price levels. These have not changed materially from the previous filing. 3. SEG confirmed the sale of all shares of Sandisk and Veeco so the only remaining shares involved in the deal price are ZOOX and LHSP. IMO the value of these, as discounted for tax and liquidity, represent an almost negligible part of the deal price now (something like $.35/SEG share). 4. The potential tax refund payable to SEG shareholders could reach as high as $2.35/SEG share. The amount and the realization of this component are uncertain. 5. An updated fairness opinion dated Aug. 29 from Morgan Stanley. This specifies that the fairness opinion refers to the overall deal price to SEG shareholders and does not speak to the individual components of the price, such as the price the LBO group is paying for the operating assets or the ratio of VRTS/SEG shares to be issued. 6. Morgan Stanley gives valuation ranges for SEG's operating business using various valuation methods. 7. SEG's summary financial projections for 2001-2008 as submitted to the LBO group are included in this filing. All disclaimers are made. I would encourage all SEG shareholders to read this filing. Intlbkr

To: Z Analyzer who wrote (1923)	8/30/2000 11:32:08 PM
From: Lynn	Read Replies (1) \| Respond to of 1989

Yes, you are reading it correctly: >Am I reading correctly that Veritas can effectively choose to sell added shares to Seagate holders in lieu of cash (just what everyone wants!! SInce my posting, SEG has filed (today) again, this time the final one before the proxies are put in the mail. Here is the lates on the stock/cash deal. Note that if VRTS wants to keep the money, they can just increase the shares of VRTS SEG shareholders get (thereby decreasing the SEG peoples' cash): Based upon the market prices of VERITAS common stock and Seagate's investment securities as of August 22, 2000, Seagate's estimated cash balance as of July 28, 2000 and the total number of fully-diluted outstanding shares of Seagate common stock as of June 30, 2000, Seagate's stockholders would receive $5.85 per share in cash and $51.67 per share in VERITAS common stock if VERITAS elects to retain no cash; $3.75 per share in cash and $53.77 per share in VERITAS common stock if VERITAS elects to retain $500 million of cash; and $2.70 per share in cash and $54.82 per share in VERITAS common stock if VERITAS elects to retain $750 million of cash. These amounts are only estimates. The actual cash and share amounts will not be determined until shortly before the completion of the merger, although the 109,330,300 shares of VERITAS to be received in the merger are fixed. For a more detailed description of how the cash and stock amounts are determined, [snip] Q: WHAT WILL I RECEIVE FROM THE MERGER? A: As a result of the merger each of Seagate's stockholders will receive their proportionate share of: - 109,330,300 shares of VERITAS common stock; and - a number of shares of VERITAS common stock determined by dividing the aggregate negotiated discount to the average market prices of investment securities of Gadzoox Networks and Lernout & Hauspie held by Seagate shortly before the completion of the merger, by the average closing price per share of VERITAS common stock for the five consecutive trading days ending two trading days immediately prior to the completion of the merger. The fixed number of 109,330,300 shares of VERITAS common stock to be issued to Seagate's stockholders represents a negotiated discount of approximately 14.6% with respect to the 128,059,966 shares of VERITAS common stock currently held by Seagate through a Seagate subsidiary. The exact number of shares of VERITAS common stock to be issued in exchange for these investment securities will be determined based upon the respective market prices of VERITAS common stock and the investment securities shortly before the completion of the merger. The negotiated discount from market value of 40% and the reduction for estimated taxes that will be applied to these investment securities reflect the view that these investment securities may not be readily tradeable in the hands of VERITAS, and that any sale of these investment securities by VERITAS will be subject to applicable federal and state income taxes. VERITAS agreed to acquire these investment securities in connection with the merger because the private equity group was not willing to acquire those investment securities for cash in connection with the leveraged buyout. Since entering into the merger agreement through August 22, 2000, Seagate has sold all of its SanDisk Corporation stock and Veeco Instruments stock, realizing gross proceeds of $375.8 million. Seagate currently believes that it may be unable to sell any of its shares of stock in Gadzoox Networks or Lernout & Hauspie until after the anticipated completion of the merger due to contractual and legal restrictions on Seagate's ability to sell those investment securities. These restrictions will continue to apply following the merger and represent part of the reason for the negotiated discount being applied to these securities in the merger. However, to the extent that Seagate is able to sell these shares prior to the completion of the merger, Seagate's stockholders will realize the value of the cash proceeds in the merger, less any taxes payable by Seagate in connection with any sale, rather than the discounted value being applied to Seagate investment securities in the merger. The market value and negotiated discounts based upon a discounted post-tax value for these securities, excluding 297,120 shares of Lernout & Hauspie held in escrow, based on August 22, 2000 closing prices is: ISSUED MARKET VALUE DISCOUNTED VALUE NO. OF SHARES HELD ------ ------------ ---------------- ------------------ (IN MILLIONS) <S> <C> <C> <C> Gadzoox Networks..... $ 48.5 $30.2 5,274,015 Lernout & Hauspie.... $118.4 $58.5 3,574,369 </TABLE> In connection with the merger between Seagate and a VERITAS subsidiary and as additional consideration payable upon the completion of the merger, each of Seagate's stockholders will also be entitled to receive their proportionate share of cash equal in amount to: - approximately $1.235 billion of the $2 billion of the cash received by Seagate (less the amount of rollover equity, as described beginning on page 90 of this document) in connection with the leveraged buyout; and - all of Seagate's other cash on hand at the completion of the merger after deducting from $150 million to $300 million to be withheld and deposited in a trust pending the resolution of some Seagate tax audits, and an additional amount necessary to satisfy Seagate's estimated tax liabilities, satisfy tax withholding obligations resulting from the acceleration of Seagate options in connection with the merger, redeem Seagate's existing indebtedness in connection with the leveraged buyout, and pay Seagate's transaction expenses. We currently estimate this net cash amount to be approximately $5.85 per share based on Seagate's estimated cash balance at July 28, 2000 and assuming that VERITAS does not make the elections described in the following paragraph. VERITAS has the right to elect to reduce this cash portion of the consideration payable in connection with the merger by either $500 million or $750 million. If VERITAS makes this election, VERITAS would issue additional shares of VERITAS common stock with an equivalent market value based upon the average market price of VERITAS common stock shortly before the time the election is made. As a result, Seagate's stockholders may realize some of the value of the leveraged buyout in the form of VERITAS common stock, rather than cash. In the event that VERITAS elects to reduce the cash portion of the merger consideration by either $500 million or $750 million, the net cash available for distribution to Seagate stockholders at the completion of the merger will be either approximately $3.75 or $2.70, respectively. [snip to end] It goes on, but basically: SEG's other holdings will be discounted big-time so that shareholders do _not_ get nearly their worth. VRTS and VRTS alone can decide it if it want to keep cash and just tack on some more shares to ex-SEG shareholders. For someone not to vote at all is the same as voting against. I'm waiting for the institutional holders to start speaking. Lynn