Seagate and Samsung Announce Strategic Alignment

After Western Digital acquired Hitachi’s storage division last month, many were speculating that Seagate would begin shopping around for its own company to acquire, and it has. Today, both Seagate and Samsung have announced a partnership that sees the former opening up its wallet, but both reaping strategic rewards.

In total, Seagate is paying $1.375 billion USD to Samsung; half of which will be cash, the other in stock. In doing so, Samsung will pass over the reign of its HDD operation to Seagate, and in return Samsung will be taking care of Seagate where its SSD business is concerned. For those unaware, Samsung is a major player in the SSD market, so having a tight alliance such as this is a big win for Seagate.

In addition to the perks mentioned above, Seagate will also be supplying HDDs to Samsung for wherever the company has a need (desktop PCs, notebooks, et cetera), and both companies will share certain patent agreements with each other. Finally, Samsung will be able to appoint one of its executives to sit on Seagate’s Board of Directors.

This “Alignment” between the two companies should prove hugely beneficial for both, with Seagate in a great position to have top access to Samsung’s SSD products, and Samsung with its pockets now a little more padded. Thanks to this merger, it means that there remain just three big HDD vendors on the market; Western Digital, Seagate and Toshiba.

SCOTTS VALLEY, Calif. – April 19, 2011 – Seagate Technology plc (NASDAQ: STX), the world leader in hard disk drives and storage solutions, and Samsung Electronics Co., Ltd., a world leader in digital consumer electronics and information technology, today announced that they have entered into a definitive agreement under which Seagate and Samsung will significantly expand and strengthen their strategic relationship by further aligning their respective ownership, investments and key technologies. Major elements of the agreement include: