Seagate acquired by Veritas Software in $20 billion deal

Seagate Technology has announced that it will be bought by Veritas Software and an investment group in a complex $20 billion deal.

The deal, which will lead to Seagate becoming a private company again, is the latest turn of events for one of Silicon Valley's oldest citizens. Founded by Al Shugart at the dawn of the computer revolution, Seagate helped define the hard drive business.

Seagate's hard drive business in many ways is the orphan in the transaction. Under the terms of the deal, Veritas, a storage management software provider, will acquire all of the Veritas shares currently held by Seagate as well as certain other assets, including Seagate's shares in SanDisk, Gadzoox and CVC, all specialists in various niches of the storage market. Seagate currently owns 128 million shares, or 33 percent, of Veritas.

Simultaneously, Seagate's hard drive business will be acquired by a group of investors led by Silver Lake Partners, an investment group that includes venture capitalists Kleiner Perkins Caufield & Byers, Jim Davidson and Roger McNamee, among others. Seagate will then become a private concern for the immediate future. The Texas Pacific Group is also an investor.

The investment group will pay approximately $2 billion in stock and cash for the assets of the hard drive business. The Silver Lake investors group originated and led the transaction, according to the companies.

Seagate investors, meanwhile, will receive consideration amounting to $77.50 per share of Seagate stock. Payment will come in the form of slightly less than a half a share of Veritas stock and $5 cash for each share of Seagate.

Seagate has traded as low as $25.12 in the past 52 weeks. At the beginning of the month, it was selling for under $50, although it has been climbing.

Although the companies have valued the deal at $20 billion, the actual price depends on the closing stock price and other variables.