Seagate Essay examples - 1635 Words

â€Å"Seagate Buyout† | Case Study Analysis | 1. Why is Seagate undertaking this transaction? Is it necessary to divest the VERITAS shares in a separate transaction? Do the shareholders of VERITAS gain or lose from this transaction? Under the original organizational structure, Seagate’s management believed its current stock price is undervalued by the current market and thus not delivering the value to shareholders of Seagate stock. At this time, Seagate also held a significant stake in VERITAS stock, nearly 40%, acquired under a previous transaction. Not long after this initial transaction had occurred, the value of VERITAS stock increase nearly 200%, as Seagate’s stock rose only 25% during that same period. The value of the†¦show more content†¦Further, we would pay off the debt using our excess free cash flow to pay off the debt. By the end of the 5th year, we would sell the firm and gain from any excess value found within the firm. | Yr 0 | Yr 1 | Yr 2 | Yr 3 | Yr 4 | Yr 5 | D/E ratio | 0.86 | 0.78 | 0.45 | 0.24 | 0.10 | 0.00 | 4. Based on the scenarios in Ex. 81, and on your assessment of the optimal amount of debt to be used in Seagates capital structure, how much are Seagates operating assets worth? Assume that of the $765 million in cash that the buyout team will acquire as part of the transaction, $500 million is required for new investment in net working capital and $265 million is excess cash. Also, assume that the buyout team plans to pay down its debt as cash flows permit during the forecast period. Estimate the value of Seagates operating assets under the following two scenarios: * Scenario (A): The buyout team plans to maintain the terminal debt level in perpetuity. * Scenario (B): Beyond the forecast period, the buyout team plans to maintain its debt at a constant percentage of the firms market value. In Scenario A, the Debt would remain at 0 for good. This results in a D/V ratio of 0 which gives us a WACC of 9.21. Using the WACC to derive the Enterprise value of the company, it is found to be $3.043B. Subtracting the debt of $1.25B, we have a Value of Equity of $1.79B. Subtracting the $765M that isShow MoreRelatedSeagate Technology1708 Words   |  7 Pagesâ€Å"LA ADQUISICIÓN DE SEAGATE TECHNOLOGY† 1. Why is Seagate undertaking this transaction? Is this necessary to divest the Veritas shares in separate transaction?   Porque el mercado estaba menospreciando el valor de sus acciones, esto ya que aun cuando Seagate Technology poseà ­a gran parte de VERITAS (155 millones de acciones) sà ³lo aumento en un 25% el valor de sus acciones que es nada si se compara con el 200% que aumentà ³ el de las de VERITAS. En sà ­ no es necesario, pero al hacerRead MoreSeagate Lbo722 Words   |  3 PagesIn May 1999, Seagate sold its software business to VERITAS Corp in a stock transaction. By undertaking this, Seagate became the largest VERITAS shareholder with over 40% stake. Small numbers of VERITAS’ outstanding shares, both in absolute terms and relative to the Seagate, created relative mispricing due to the increase in demand and decrease in supply. VERITAS stock price appreciated dramatically but Seagates stock price didn’t; as the result the market value of Seagates VERITAS stake exceededRead MoreSeagate Buyout8389 Words   |  34 PagesSeagate 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........................Read MoreSeagate Technology1693 Words   |  7 Pagesâ€Å"LA ADQUISICIÓN DE SEAGATE TECHNOLOGY† 1. Why is Seagate undertaking this transaction? Is this necessary to divest the Veritas shares in separate transaction?   Porque el mercado estaba menospreciando el valor de sus acciones, esto ya que aun cuando Seagate Technology poseà ­a gran parte de VERITAS (155 millones de acciones) sà ³lo aumento en un 25% el valor de sus acciones que es nada si se compara con el 200% que aumentà ³ el de las de VERITAS. En sà ­ no es necesario, pero al hacer unaRead MoreSeagate Technology Buyout1198 Words   |  5 Pagesintensive, heavy investments which is not feasible if the Seagate Inc. remains a public company The other capital reorganisations alternatives are involving significant tax liability and considering the present nature of events that Seagate is a public Company, the tax liability will result to loss of the wealth of the shareholders where the capital restructuring option involves corporate taxes as well as personal tax liability. The stock of Seagate Inc., experience an adverse value gap, Such that theRead MoreSeagate Case2016 Words   |  9 Pagesï » ¿ Seagate Buyout Case Group 5 Heng Qiao Eduardo Pereira Wei Wang Yanan Pei Introduction of the companies Seagate Technology, Inc. is one of the world’s largest manufacturers of computer disk drives and related data storage devices with approximately $6.5 billion in annual revenues. In early November 1999, Luczo, president and CEO of Seagate considered a restructuring proposal with Silver Lake, a successful private equity firm that is specified in technology businessRead MoreSeagate Case Study1582 Words   |  7 PagesCase 9 10 Analysis Seagate Technology Buyout The Hertz Corporation Advanced Corporate Finance MW 2:00-3:15 PM  Question 1 On page 1, the â€Å"value-gap† is two-fold. It signifies an under-valuation of Seagate’s core disk drive operating assets due to unfavorable public market investor preferences. Furthermore, the value of the Veritas share price has caused the Veritas stake to far outweigh the value of Seagate’s stand-alone market capitalization. Since Seagate does not own at least 80%Read MoreComputer Component Upgrade : Parts Of A Computer Essay2061 Words   |  9 Pagesalso be beneficial as his current hard drive is also near failing. 1TB HDD s Hard Drive Name Cache RPM Price 1 Seagate Barracuda ST31000340AS 32MB 7200 $54.48 2 WD Blue WD10EZEX 64MB 7200 $82.25 z Seagate Barracuda ST1000DM003 64MB 7200 $84.38 4 WD Green WD10EZRX 64MB 5400 $86.88 5 WD Blue WD10EALX 32MB 7200 $94.30 6 Seagate SV35.6 ST1000VX000 64MB 7200 $94.33 7 Seagate Barracuda 7200.12 ST31000524AS 32MB 7200 $97.34 8 WD Red WD10EFRX 64MB 5400 $107.95 9 WD AV-GP WD10EURX 64MB 5400Read MoreThe Importance Of Teamwork And Increase Teamwork At Seagate1779 Words   |  8 Pagesstarted EcoSeagate in 2000, after becoming president of the hard drive manufacturing company Seagate. EcoSeagate is a team development meeting held in the desolated mountains of New Zealand. 200 employees are chosen and split into 40 groups of 5 and each employee must read The Five Dysfunctions of a Team. The purpose of this annual event is to show the importance of teamwork and increase teamwork at Seagate. For five days they go through competitive events to encourage them to work together hopingRead MoreEffective Global Strategic Sourcing. Case Study- Seagate Essay744 Words   |  3 PagesSeagate Case Study Seagate Case Study Vincent Morales MBA 6127 Based on the case study Seagate Technology: Real time response to demand, the article discuss key points in regards to Seagate’s evolution of their supply chain to increase visibility and improve service. Seagate changes the role to a real time demand from a change in planned forecast, of which, allowed low risks. This allowed visibility of Holy Grail, which was also ideal for the supply chain evolution. In parallel