Seagate Takes Over Samsung's HDD for $1.375bn

Samsung and Seagate this morning announced a “broad strategic alignment” that will see Seagate take over Samsung’s hard drive disk division.

It was just last month that Western Digital acquired Hitachi’s HDD unit for $4.3 billion, and now it looks as though Samsung and Seagate are teaming up to take on the newly strengthened WD. First rumored yesterday, Seagate’s $1.375 billion purchase of Samsung’s HDD division was confirmed early today. Half of the $1.375 billion price is to be paid in cash, while the remaining 50 percent will be paid in stocks.

Aside from combining the two companies hard disk drive divisions, the deal will also further extend the existing patent cross-license agreement between the two. Other elements of the deal include a NAND flash memory supply agreement that will see Samsung provide Seagate with semiconductor products for use in SSDs and hybrid SSDs; a disk drive supply agreement under which Seagate will supply disk drives to Samsung for PCs, notebooks and consumer electronics; a partnership between the two to co-develop enterprise storage solutions; and a shareholder agreement that will see a Samsung executive join the Seagate Board of Directors.

“We are pleased to strengthen our strategic relationship with Samsung in a way that better aligns both companies around technologies and products,” said Steve Luczo, Seagate chairman, president and CEO. “With these agreements, we expect to achieve greater scale and deliver a broader range of innovative storage products and solutions to our customers, while facilitating our long-term relationship with Samsung.”

“Delivering value to the market and consumers is the primary goal of the extensive agreement announced today. Samsung looks forward to extending our existing strategic ties with Seagate, to deliver creative technology solutions for a broad diversity of consumer, business and industrial applications,” said Oh-hyun, Kwon, president of the semiconductor business of Samsung Electronics.

Of course, the whole thing is subject to the usual red tape and regulatory approvals, so it won’t be signed and sealed for months. Seagate says it expects the deal to be closed by the end of the 2011 calendar year.