Seagate Technology, a provider of hard disk drives (HDD) and storage solutions, and Samsung Electronics, a supplier of digital consumer electronics and information technology, have entered into a definitive agreement under which Seagate and Samsung will significantly expand and strengthen their strategic relationship by further aligning their respective ownership, investments and key technologies. Major elements of the agreement include
Seagate Technology, a provider of hard disk drives (HDD) and storage solutions, and Samsung Electronics, a supplier of digital consumer electronics and information technology, have entered into a definitive agreement under which Seagate and Samsung will significantly expand and strengthen their strategic relationship by further aligning their respective ownership, investments and key technologies. Major elements of the agreement include:
- Samsung combining its HDD operations into Seagate
- Extending and enhancing the existing patent cross-license agreement between the companies
- A NAND flash memory supply agreement under which Samsung will provide Seagate with its semiconductor products for use in Seagate's enterprise solid state drives (SSDs), solid state hybrid drives and other products
- A disk drive supply agreement under which Seagate will supply disk drives to Samsung for PCs, notebooks and consumer electronics
- Expanded cooperation between the companies to codevelop enterprise storage solutions
- Samsung receiving significant equity ownership in Seagate
- A shareholder agreement under which an executive of Samsung will be nominated to join Seagate's Board of Directors
The combined value of these transactions and agreements is approximately US$1.375 billion, which will be paid by Seagate to Samsung in the form of 50 percent stock and 50 percent of cash.
These transactions and related strategic agreements will enable both companies to better align their current and future product development efforts and roadmaps, accelerate time-to-market for new products and position the companies to better address rapidly evolving opportunities in markets including, but not limited to, mobile computing, cloud computing and solid state storage. In connection with its strategic alliance with Samsung, Seagate expects also to strengthen its relationship with TDK /SAE Magnetics (H.K.) . Together, these transactions and agreements broaden a strategic relationship between Seagate and Samsung that began with a joint development agreement announced in August 2010.
Seagate expects these transactions and agreements to be meaningfully accretive to non-GAAP diluted earnings per share and cash flow within the first full year following the closing, and Seagate does not expect any material restructuring costs in connection with them.
The transactions and agreements significantly expand Seagate's customer access in China and Southeast Asia. In addition, the mutual supply agreements enable Seagate to secure an important source of NAND flash supply as the company expands its SSD and solid state hybrid product offerings, and position Seagate to be a more significant supplier of disk drives to Samsung. The agreement also gives Samsung a significant ownership position in Seagate.