|
 Xyratex shares were up 27 percent at $13.25 per share in morning
trading, matching Seagate's offer price.
The deal will help Seagate acquire testing equipment for its hard
disk drives (HDD) along with storage systems to analyze and manage
network data.
The acquisition could help Seagate maintain its gross margins at the
27-33 percent level as it begins to own more of the equipment that
it uses, FBN Securities analyst Shebly Seyrafi told Reuters.
Seagate and rival Western Digital Corp, which dominate the HDD
market, have been trying to expand their presence in the faster and
more energy efficient solid-state drives market as demand slows in a
declining PC market.
Seagate's deal with Xyratex could be a "complementary asset, but not
a real game-changer", Argus Research analyst Jim Kelleher said.
Seagate shares were little changed at $55.92 on the Nasdaq on
Monday.
The company said it expects the deal to close in mid-2014, and add
about $500-$600 million in revenue in its fiscal year 2015.
[to top of second column] |
Allen & Co LLC was the financial adviser for Seagate, while Wilson
Sonsini Goodrich & Rosati acted as primary legal adviser.
Credit Suisse was the financial adviser and Latham & Watkins LLP the
legal adviser to Xyratex.
(Reporting by Neha Alawadhi and Aurindom
Mukherjee in Bangalore; Editing by Joyjeet Das)
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