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Seagate acquires Samsung HDD business

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DQW Bureau
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A strategic partnership between href="http://www.ciol.com/Technology/Storage/News-Reports/Seagate-announces-SSDs-HDDs-in-India-aims-at-enterprises/148796/0/">Seagate

and href="https://www.dqweek.com/samsung-advances-smarter-life-concept">Samsung

was announced in August 2010. Taking the partnership a

step ahead, Seagate is now about to takeover Samsung's hard disk

manufacturing and operations division globally for $1.38 bn. The

transaction was offered to Samsung comprising of 45.2 mn shares and

the remainder of the payment in a cash value of $687.5 mn. After

receiving the shares, the notebook major will become the second

largest shareholder of Seagate with a 9.6% stake in the company.

Under the terms of the agreement, Samsung will provide Seagate with

its premium NAND flash memory supply for use in Seagate's

enterprise solid state drives, solid state hybrid drives and other

products, while Seagate will provide with the HDD for the Samsung

range of laptops and desktops including consumer electronics. Also,

under the terms of agreement, Samsung has the right to nominate one

of its key personnel in Seagate's board of directors.

The deal is yet to get the approval by

the US court and related international judiciaries, Seagate partners

seem to have little to care about the 'global deal' with most of

them unaware of this fact. Neither Samsung nor Seagate has apparently

made any communication to its channel partners including its national

distributors in India. When contacted by The DQ Week, VK Bhandari,

director, Supertron Electronics, one of Seagate's NDs said, “I

have heard something about this acquisition, but there has not been

any official announcement from Seagate to the channels.” Also,

Ramesh Purohit of Omshakti Computers stated, “There has not been

any official communication from Seagate over this (deal) and I am

also not aware of it.” With most of the channel partners of Seagate

not intimated about this acquisition, either officially or in person,

some of the channel partners feel that there won't be much of an

impact on the Indian front. Speaking about the same, Ajay Kumar of

Venktron Digital Systems said, “There won't be any major effect

in the Indian market. If at all there needs to be any change in

either of the vendor's channel policy, it will come in by the end

of this CY.” However, according reports in the market, Samsung's

HDD shipments to India has been inactive for the past one and a half

quarters and there is negligible or no stocks with the Samsung HDD

distributors. “I think there is no stock of Samsung HDD with the

distributors. Acquisition of Samsung HDD (by Seagate) may be globally

beneficial for Seagate, but I doubt about any impact or changes in

India,” he added. Speaking on a similar tone, Asif Khan of

Technocrat Infotech said, “Samsung has diminutive presence in the

Indian HDD market. The agreement will obviously benefit Seagate as it

will increase its presence in the global markets.”

Prior to this deal, Western Digital had

also acquired the storage division of Hitachi and with this new

acquirement in place, global HDD shipments is expected to fall by

about 4%. “Acquisition is a global trend now and is acute in the

IT scenario. However, with two acquisitions occurring at a row this

year, the HDD market is poised to become more competitive,” Khan

added. At present, Western Digital accounts for 31% of global hard

drive shipments in the fourth quarter, followed by Seagate at 30%,

Hitachi at 18%, Toshiba contributing 11% and Samsung at the bottom at

10%.

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