Seagate Scoops Up Samsung's Hard Drive Business for $1.375 Billion

Paul Lilly

As of today it's official, Samsung is out of the hard drive business and significantly richer as a result. Samsung reportedly hoped to pull in $1.5 billion but was willing to entertain offers below $1 billion. Turns out the company didn't have to, as Seagate stepped up to the plate with a $1.375 billion offer, half of which it will pay in cash and the other half in stock. Samsung will also receive a 9.6 percent stake in Seagate, but there's more to this deal than hard drives, cash, and stock.

The two sides also used the deal to extend and enhance their existing patent cross-license agreement, ensuring that the two remain BFFs after money changes sides. In addition, Samsung agreed to provide Seagate semiconductor products for use in Seagate's enterprise solid state drives, solid state hybrid drives, and other products.

Other terms of the deal include:

  • Seagate will supply disk drives to Samsung for PCs, notebooks, and consumer electronics
  • Expanded cooperation between the companies to co-develop enterprise storage solutions
  • A shareholder agreement under which an executive of Samsung will be nominated to join Seagate's Board of Directors

"We are pleased to strengthen our strategic relationship with Samsung in a way that better aligns both companies around technologies and products," said Steve Luczo , Seagate chairman, president and CEO. "With these agreements, we expect to achieve greater scale and deliver a broader range of innovative storage products and solutions to our customers, while facilitating our long-term relationship with Samsung."

This is one of those cases where both sides appear to come out ahead. Samsung, which was losing money on its hard drive business, suddenly receives an infusion of cash and stock, but there's more here than a simple sale. The deal was just as much about a "broad strategic alignment" as it was the sale of a diminishing HDD business.

Image Credit: Flickr (Robert Scoble)

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