Seagate and Samsung combine hard drive businesses

HARD DRIVE MAKERS Seagate and Samsung have struck a deal to combine their hard drive businesses in a £845 million agreement.

This news comes only a day after we reported that Samsung was looking to sell its hard drive division. Though Seagate hasn't completely bought Samsung's hard drive operation, the deal between the two major players will see Seagate paying Samsung and will be split half and half between stock and cash.

The agreement means that Samsung will supply Seagate with NAND flash memory for use in its solid state drives and other products. Seagate will supply Samsung with disk drives for use in its range of products including PCs and laptops.

The two companies will look to co-develop enterprise storage products and extend the patent cross license agreement that already exists after a joint development agreement signed in August of 2010.

As part of the deal Samsung will receive significant equity ownership in Seagate of 45.2 million shares, which works out to 9.6 per cent ownership. A shareholder agreement has also been made under which a Samsung executive will be nominated to join Seagate's board of directors.

The companies expect to close the transactions by the end of this year.

Seagate says the move will give the companies an advantage in future product development, accelerate time-to-market for new products and put them in a better position to compete in growing market areas such as mobile computing, cloud computing and solid state storage.

Steve Luczo, CEO of Seagate said, "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." µ