Seagate Technology To Buy Xyratex Ltd. For About $374 Mln - Quick Facts

(RTTNews) - Seagate Technology plc (STX) has agreed to acquire all outstanding shares of Xyratex Ltd. (XRTX), a provider of data storage technology, in an all-cash transaction valued at $13.25 per share, or around $374 million, including nearly $80 million cash on Xyratex's balance sheet as of August 31, 2013. This represents a premium of about 27% per share over Xyratex's stock price at the close of trading on December 20, 2013.

According to Seagate, this acquisition would further strengthen its vertically integrated supply and manufacturing chain for disk drives and ensure uninterrupted access to important capital equipment. It also expands Seagate's storage solutions portfolio by adding Xyratex's enterprise data storage systems and high-performance computing business. Seagate said it would operate this business as a standalone entity.

Seagate currently expects the acquisition to be neutral to its earnings per share in its fiscal 2015, and projects positive cash flow immediately following the transaction and sees revenue contribution to be between $500 million and $600 million in fiscal 2015.

The transaction, approved by Xyratex's board, is expected to close in mid-calendar year 2014. Baker Street Capital, Xyratex's largest shareholder, has agreed to vote its shares in favor of the transaction. Seagate anticipates to finance the deal from existing cash balances and is not subject to any financing conditions.