Seagate acquires Samsung's hard disks business in $1.38 billion deal

The world's second-largest hard disk drives maker behind Western Digital, Seagate Technologies has entered into an agreement to acquire Samsung Electronics' hard disk drives and storage business in a $1.37-billion cash and stock deal.

Under the terms of the agreement, Samsung will receive an approximately 9.6-per cent stake in Seagate valued at $687.5 million and another $687.5 million in cash, plus a seat on the Seagate board.

With this divestment, Samsung's largest till date, the S Korean electronics giant will become Seagate's second largest shareholder.

The transaction, expected to close by the end of calendar year 2011, has no financing contingencies, and is subject to customary closing conditions, including review by US and international regulators.

The deal will lead to Seagate and Samsung expanding their cross-licensing and research and development collaboration; Samsung will supply Seagate with its Nand flash memory chips for Seagate's solid state drives, and in turn source Seagate's hard disk drives for the PCs, notebooks and consumer elctronics products that it makes.

The two companies propose to enter new areas like mobile computing, cloud computing and of the faster, more power-efficient solid-state drives, in which Samsung along with Intel and micron is among the leading makers.