Under the terms of the transaction, Seagate has gained select elements of Samsung’s HDD business, including assets, infrastructure and employees that enable Seagate to drive scale and innovation, it was reported.
According to representatives, these assets include Samsung’s M8 product line of high-capacity, 2.5-inch HDDs.
Samsung employees joining Seagate include a number of senior managers and design-engineering employees from Samsung’s Korea facility, who will focus on development of small form-factor products for the mobile compute market, the company said.
N.Y. Park, senior VP and GM, will oversee Seagate’s product development activities in Korea and serve as country manager of the Korea design centre, reporting to Bob Whitmore, Seagate’s executive VP and CTO, it was reported.
“Together, Seagate and Samsung have aligned our current and future product development efforts and roadmaps in order to accelerate time-to-market efficiency for new products and position us to better address the increasing demands for storage,” said Steve Luczo, Seagate chairman, president and CEO. “It is an exciting time in the industry with rapidly evolving opportunities in many markets including mobile computing, cloud computing, and solid state storage.”
This transaction was announced in April 2011 along with a series of other agreements between Seagate and Samsung. Seagate is supplying disk drives to Samsung for PCs, notebooks and consumer electronics devices. Samsung is supplying its market-leading semiconductor products for use in Seagate’s enterprise solid state drives (SSDs), solid-state hybrid drives and other products.
The companies have also extended and enhanced their existing patent cross-license agreement and have expanded cooperation to co-develop enterprise storage solutions.
“The strategic relationship will open new opportunities for the two companies by mutually complementing each other’s creative technology solutions for a broad diversity of IT applications,” said Oh-Hyun Kwon, vice chairman of device solutions of Samsung Electronics.
The transactions and agreements substantially expand Seagate’s customer access in China, Southeast Asia, Brazil, Germany and the Russian Federation, analysts said.
Seagate and Samsung also have been working together to ensure that customers continue to receive a high level of service, support and innovation, including activities to align the two companies’ supply bases and delivery infrastructure. To ease the transition of products and technologies, Seagate will retain certain Samsung HDD products under the Samsung brand name for 12 months, and maintain or establish a number of independent operations including sales staff, key production lines and R&D.
The combined value of these transactions and agreements is approximately US $1.4 billion, the company said. In addition, Samsung will designate a nominee to join Seagate’s Board of Directors.
Seagate does not presently expect significant restructuring costs and expects to achieve considerable reductions in overall operating expenses for the combined business while minimising the integration costs. As previously stated, Seagate expects that the transactions and agreements will be meaningfully accretive to non-GAAP diluted earnings per share and cash flow in the first full year following the closing. Seagate will provide additional financial information for the combined company on its fiscal second quarter conference call in late January.