Seagate Buyout

8389 Words34 Pages
Seagate Technology Buyout
March 22, 2006

By:
Rachel Cluck
Beth Crocker
Heather Preston
Jessica Seal

Table of Contents
Introduction............................................................................3
Objectives ..............................................................................3
Overview................................................................................4
Alternatives – How to Address Seagate’s Low Stock Price ..5
Do Nothing.............................................................................6
Unload all VERITAS Stake ...................................................7
Sell to Other Investors ...........................................................7
Horizontal Merger or
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Throughout the paper, we will compare and contrast our ideas to theirs and show why our figures are better suited for this type of business transaction.
Overview
In the next few sections we will give an overview of:


The different actions that could have been taken to address Seagate’s low stock price o Do nothing o Unload VERITAS shares o Sell to other investors o Engage in a merger or buyout



Vertical integration and leveraged buyouts, since both are major concerns for Seagate and its future

4



The two different ways we used to reach an estimated price for LBOs since it is a critical price for Seagate, its shareholders, and to Silver Lake o If priced too high, Silver Lake may hesitate due to volatility in the disk drive sector o If too low, Seagate shareholders will not receive the full value of their investment



Calculations for the LBO price o The discounted cash flow model o The LBO model

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