Seagate Technology Buys Back 32.7 Mln Shares Held By Samsung For $1.51 Bln

(RTTNews) - Hard disk drive maker Seagate Technology plc (STX) said Tuesday that it has completed a private share redemption transaction of 32.70 million of its ordinary shares held by South Korean conglomerate Samsung Electronics Co. (SSNLF) for a total purchase price of $1.51 billion. The shares redeemed represent about 9 percent of Seagate's outstanding shares as at the end of fiscal first quarter 2014.

In a filing with the U.S. Security and Exchange Commission, Seagate said it will repurchase the 32.70 million shares at a price of $46.03 per share for a total purchase price of $1.51 billion. The company added that it expects the transactions contemplated by the share redemption agreement to be consummated on October 7 and no later than October 18. Upon closing of the transaction, Samsung will receive the redemption price payable in cash.

Seagate noted that following the private share redemption transaction, Samsung will continue to own about 12.5 million shares of Seagate. Upon closing of the transaction, Samsung's right to appoint one representative to Seagate board of directors so long as Samsung continued to beneficially own at least 7 percent of Seagate's outstanding ordinary shares shall terminate.

However, Dr. Seh-Woong Jeong, Executive Vice President at the Systems LSI Division of Samsung Electronics, will remain on the Seagate board of directors. The two companies also reaffirmed their strategic alignment announced in April 2011.

Seagate closed its $1.375 billion acquisition of Samsung's hard disk drive business in December 2011. The company had offered Samsung 45.2 million of its shares valued at $687.5 million plus another $687.5 million in cash as consideration for the transaction.

Steve Luczo, Seagate Chairman, President and Chief Executive Officer of Seagate Technology said, "We are pleased that Samsung intends to continue to be a long-term strategic shareholder and valued business partner with Seagate. Our success with the Samsung hard disk drive products that we acquired has exceeded our expectations and we are very encouraged with our joint product development for enterprise solid state drives."

Seagate said that returning value to shareholders was a top priority for the company and that it remained committed to its share redemption and dividend plan. Further, the company said that with the Samsung transaction, it was on track to meet its stated goal of returning about 70 percent of operating cash flow to shareholders in the current fiscal year.

STX closed Wednesday's regular trading session at $44.88, up $0.09 or 0.20 percent on a volume of 3.82 million shares. In after-hours, the stock further gained $0.32 or 0.71 percent to $45.20.