The Work

April 19, 2011 4:01 PM

Wilson Sonsini, Paul Hastings on Seagate's $1.4 Billion Acquisition of Samsung Unit

Posted by Tom Huddleston Jr.

Seagate Technology plc announced on Tuesday that it has agreed to purchase the hard-disk drive unit of Samsung Electronics Co., Ltd., in a transaction valued at nearly $1.38 billion.

The cash-and-stock deal would see the South Korean electronics giant receive 45.2 million Seagate shares valued at $687.5 million--based on the average closing price over 30 days prior to signing--along with $687.5 million in cash. The shares in question represent a 9.6 percent stake in Seagate, which would make Samsung the second-largest shareholder in the Dublin, Ireland-based hard-disk producer, according to Bloomberg.

Wilson Sonsini Goodrich & Rosati is advising Seagate in the acquisition, with a team based mostly in Palo Alto, including chairman Larry Sonsini, as well as corporate partners Mark Baudler and Michael Ringler. Technology transactions partner Selwyn Goldberg is also working on the deal, and partner Scott Sher is advising on antitrust issues. The firm advised Seagate in 2006, when the company paid $1.9 billion for Maxtor Corporation, and also in 2000, in Seagate's $20 billion sale to Silver Lake Partners and merger with Veritas Software Corporation.

Ken Massaroni, general counsel at Seagate, led the company's in-house legal team on the transaction.

Meanwhile, Samsung has turned to Paul, Hastings, Janofsky & Walker corporate partners Matthew Berger and Daniel Kim in Palo Alto and Hong Kong, respectively. Other lawyers on the transaction include corporate partners Rob Carlson, Jeff Hartlin, and Carl Sanchez; along with antitrust partners Scott Hataway, Pierre Kirch, and Michael Cohen.

The firm has worked with the company and its subsidiaries many times in the past, including representing Samsung Securities as the underwriter in the 2009 $200 million IPO and share listing by wind tower manufacturer Dongkuk S&C.

Upon closing of the transaction--expected by the end of 2011--Samsung's 9.6 ownership stake in Seagate would also entitle the South Korean company to nominate a director to Seagate's board. Under the agreement, Samsung would also supply Seagate with a supply of NAND flash memory, which is used in Seagate-produced data storage devices. Seagate will, in turn, supply Samsung with disk drives for PCs and notebook computers.

The agreement comes a little over a month after Seagate's largest disk drive rival, Western Digital Corporation, announced its plans to pay $4.3 billion for Hitachi, Ltd.'s data storage business. Bloomberg noted that market research firm iSuppli has predicted roughly a 4 percent drop in hard-disk drive shipments this quarter--due, in part, to rising tablet computer sales decreasing demand for conventional PCs. The loss in sales is expected to spur consolidation.

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