Report: Seagate rejected WD takeover bid

Well, that’s a surprising nugget of news. According to Bloomberg, Western Digital offered to purchase Seagate shortly after the latter confirmed, in mid-October, that it was in talks to sell itself and go private. Bloomberg’s sources say Seagate ended up turning down offers from both WD and private equity firm TPG Capital.

Western Digital was reportedly willing to put up quite a bit of money: "10 percent to 50 percent" more than TPG, which is itself reported to have bid more than $7.5 billion. That’s way more than what WD has kicking in the bank ($2.9 billion, Bloomberg says) and more than the company itself is worth on the stock market (about $8 billion). That said, the talks apparently didn’t break down because of financial reasons. Bloomberg quotes its sources as saying a WD-Seagate merger "would have faced antitrust obstacles and may have resulted in management departures."

As an analyst quoted in the story points out, there’s quite a bit of overlap between the two companies’ product offerings—you know, since they’re direct competitors and all. This wouldn’t have been like AMD’s 2006 buyout of ATI, where the two parties were clearly complementary, and the deal gave AMD a strong chipset business and the ability to integrate graphics into its CPUs. More likely, it would have resembled Seagate’s takeover of Maxtor, in which the goal was to eliminate a competitor and consolidate market share.

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    • thermistor
    • 9 years ago

    I love the “may have resulted in management departures” thing.

    Yeah, because redundant big shots at the top of each organization pulling down $$$ totally out-of-whack with their real contributions is totally a reason to stop of the creative destruction of capitalism.

    Getting rid of people that actually do the work is “streamlining” or “right-sizing”; even the hint of eliminating upper management positions is a good reason to kill any merger/acquisition <sarcasm>.

      • indeego
      • 9 years ago

      Yeah the little bees should run the company. It’s only a 7 billion gamble, and no other company in the world works that way. You startg{

        • l33t-g4m3r
        • 9 years ago

        worker bees can leave
        even drones can fly away
        the queen is their slave

        • clone
        • 9 years ago

        absolutes rarely if ever apply or succeed.

        the criticism being mentioned regarded redundancy and just how many chiefs are needed to keep the indians busy.

    • albundy
    • 9 years ago

    its hysterical that WD thinks mechanical drives are here to stay. are they trying to corner the HDD market to jack up prices?

    • l33t-g4m3r
    • 9 years ago

    I’d like to ask what has seagate done with the maxtor takeover?
    Maxtor clearly had drives that performed very well at multitasking, while seagate is still the worst. If they aren’t going to make use of the acquired technology, then I see the takeover purely as an anti-competitive move. What a total waste.

    • ronch
    • 9 years ago

    That’s what’s happened in the HDD industry. Maxtor snaps up Quantum, Seagate buys Maxtor. Seagate also bought Conner. Then Toshiba and Fujitsu got in bed. Hitachi wanted a piece of the action so they bought IBM’s hard drive business, but rumor has it that they’ve had enough action already and wanna opt out. It’s a story of mergers and acquisitions. The only one left untouched is Samsung.

    Too much consolidation. I hope no more mergers happen because we’re down to just 4 players on the desktop (ST, WD, SEC and HGST). I don’t want this to be an Intel-AMD-only industry.

      • jdaven
      • 9 years ago

      You forgot the other players which makes your point moot:

      A-Data
      Corsair
      Crucial
      Filemate
      G.SKILL
      Imation
      Intel
      Iomega
      Kingston
      Mushkin
      OCZ
      Patriot
      Plextor
      RITEK
      SanDisk
      Transcend
      Zalman

        • ew
        • 9 years ago

        None of those companies make hard drives and most of them only assemble solid state drives.

          • just brew it!
          • 9 years ago

          Or slap their nameplate on a SSD manufactured by someone else.

          • dmjifn
          • 9 years ago

          Sounds like you got his point, then. 🙂

          • jdaven
          • 9 years ago

          I took all those names directly from the Newegg Power Search for SSD. These companies are the final names on the product packaging therefore they are HDD manufacturers just like Seagate and WD.

            • ew
            • 9 years ago

            Ok, I didn’t realize SSDs and HDDs were the same thing.

            • jdaven
            • 9 years ago

            How does an OS tell the difference between an HDD and SSD? Oh that’s right it doesn’t.

            • just brew it!
            • 9 years ago

            You still haven’t addressed the point that many of the brands you listed aren’t manufacturers, they are just putting their name on products manufactured by someone else.

            WD and Seagate both manufacture their own products.

            • jdaven
            • 9 years ago

            All manufacturers use components from other sources. WD and Seagate could outsource metal machined parts, controller chips, all the way down to label printing and the SATA connector. Do you really think that WD and Seagate pour their own plastic molds? Not likely.

            In the end, most companies assemble their products using a combination of labor from internal and external sources. Only when you get down to a discrete part like a screw, maybe an IC, can you say a company manufacturers the whole product. HDDs are assemblies as well as SSDs. I have no idea how much of the total assembly is manufactured in house. I’m guessing neither do you and you were assuming that Seagate and WD make the entire HDD from the ground up including every part.

            • Bauxite
            • 9 years ago

            Very few companies make the read/write heads and develop further advances (aka R&D) in the magnetic recording tech.

            None of them are on your list of ssd oems (and rebranders), not even intel.

            Your posts are way off *[

            • jdaven
            • 9 years ago

            Dude, I’m talking about an SSD and a HDD. They both can boot OSes and have programs and files on them. They both have SATA connectors. They both come in the same form factors (1.8″, 2.5″, 3.5″). THEY ARE BOTH STORAGE DRIVES FOR GOD’S SAKES!!!

            This is right on topic. The MBA uses only SSD now. In the past, it would have HDD. This is competition. Sony’s Vaio Z series only have SSDs. In the past, they would have been HDDs provided by Seagate, WD, etc.

            Are you guys freakin’ kidding me? Are you all saying that there is no overlap in markets between SSDs and HDDs? Seagate isn’t competing against OCZ? Soon all storage devices will be SSD and HDDs will be discontinued. So even if Samsung, Seagate, WD, Hitachi, etc. all became one company, they would have ZERO market share unless they start to sell SSDs.

            • just brew it!
            • 9 years ago

            My point is that WD/Seagate design and manufacture their own products. Yes, I realize they don’t physically manufacture most of the internal components in-house. But they own the IP (hardware and firmware) inherent in the design of the drive, and they do (at least) the final assembly and testing, using parts which may come from outside vendors, or from contractors who manufacture components to spec.

            Some — if not most — of the companies who have recently jumped into the SSD market do little more than slap a name plate on someone else’s reference design.

            • mcnabney
            • 9 years ago

            No, they are all SSD marketers.

            Buying someone elses product and slapping your brand on it does not make you a manufacture.

            They don’t own the factory, assemble the product, or own the IP.

            • Frith
            • 9 years ago

            Comparing SSDs to hard disks is like comparing cars to motorbikes – they both do exactly the same thing (transport you from A to B) but are still totally different.

            There’s no way I could replace my 24TB of hard disk storage with SSDs unless I won the lottery. Likewise, there’s no way I’ll ever use a hard disk as a boot drive since SSDs are faster and done make all the churning noises.

            What ronch is saying is absolutely right, while what you’re saying is utterly stupid.

            • just brew it!
            • 9 years ago

            WTF are you doing with 24 TB?!??

            And I actually disagree that they do exactly the same thing. Mechanical hard drives are like a family sedan (or a mini-van, in the case of the 2TB models) — they get the job done, but the performance is mediocre. SSDs are an Indy car — really fast, but really expensive and very limited cargo capacity.

        • srg86
        • 9 years ago

        In this context these don’t count imho, this is about mechanical hard drives.

      • srg86
      • 9 years ago

      In the 80s (especially) and 90s there were many more HD makers, such as:

      Micropolis
      Miniscribe (Bought by Maxtor after a scandal, a lot of Maxtor drives since were effectively miniscribes)
      Kalok
      Priam
      Rhodime
      Conner
      NEC
      MicroScience
      Kyrocera
      Alps Electric
      Tandon
      Western Digital (who bought into it with the aquisition of Tandon)
      DEC (bought by Quantum)
      Quantum (bought by Maxtor)
      Maxtor (bought by Seagate
      IBM (Now Hitachi)
      Samsung
      And of course Seagate (who invented the desktop hard disk).

        • just brew it!
        • 9 years ago

        Control Data Corporation made hard drives back in the ’80s as well. Their hard drive division was eventually spun off, then gobbled up by Seagate shortly thereafter.

        • Corrado
        • 9 years ago

        I remember Quantum Fireballs being the fastest drives around, but fairly unreliable. And their BigFoot 5.25″ HDs that had MASSIVE capacity for a low cost, but also they were fairly slow. I had 1 of each in my Pentium 200MMX with 64mb of RAM. a 1.3GB fireball and a 10GB BigFoot. Those were the days.

    • joselillo_25
    • 9 years ago

    This guys are something to short in the long term, IMHO.

    • jdaven
    • 9 years ago

    I don’t see this as anti-competitive because SSD products brought so many memory makers into the hard drive market. Now the likes of Kingston, G-skill, OCZ, etc. compete directly with Seagate and WD.

    If anything the market share of both Seagate and WD will shrink unless they really start ramping up SSD production.

      • Corrado
      • 9 years ago

      Not only that, but get their prices competitive. WD’s SSDs are ridiculously priced compared to the competition.

        • just brew it!
        • 9 years ago

        That’s because WD’s SSDs are based on technology they acquired when they bought SiliconSystems. SiliconSystems was aimed squarely at the industrial/military market, which is a completely different world. Extra reliability/security features, SLC flash chips, extended temperature range operation, that sort of thing.

        We actually use WD SSDs where I work, but we’re looking for a replacement. Not because of the cost, but because since the WD buyout they’ve started phasing out the products and features which previously made SiliconSystems SSD devices the clear choice for secure and/or rugged applications.

    • Jigar
    • 9 years ago

    Time will tell if this was a good move or not…

      • xii
      • 9 years ago

      Interesting platitude. In fact, I will make this my default answer to any article on this site. 🙂

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