Seagate Buyout
Seagate Technology Buyout
March 22, 2006
By:
Rachel Cluck
Beth Crocker
Heather Preston
Jessica Seal
Table of Contents
Introduction............................................................................3
Objectives ..............................................................................3
Overview................................................................................4
Alternatives – How to Address Seagate’s Low Stock Price ..5
Do Nothing.............................................................................6
Unload all VERITAS Stake ...................................................7
Sell to Other Investors ...........................................................7
Horizontal Merger or Buyout.................................................7
Vertical Integration ................................................................8
Leveraged Buyouts ............................................................. 10
The Discounted Cash Flow Model ..................................... 11
The Leveraged Buyout Model ............................................ 12
The SML Approach ............................................................ 13
LBO Price ........................................................................... 14
Capital Structure Proposed ................................................. 15
Payback Period for Silver Lake .......................................... 17
Shareholders’ Approval ...................................................... 17
VERITAS Shareholders’ .................................................... 19
Seagate Shareholders’......................................................... 19
Conclusion .......................................................................... 20
Exhibits ............................................................................... 21
Interview with Dave Kahre, CPA....................................... 27
Interview with Chris
March 22, 2006
By:
Rachel Cluck
Beth Crocker
Heather Preston
Jessica Seal
Table of Contents
Introduction............................................................................3
Objectives ..............................................................................3
Overview................................................................................4
Alternatives – How to Address Seagate’s Low Stock Price ..5
Do Nothing.............................................................................6
Unload all VERITAS Stake ...................................................7
Sell to Other Investors ...........................................................7
Horizontal Merger or Buyout.................................................7
Vertical Integration ................................................................8
Leveraged Buyouts ............................................................. 10
The Discounted Cash Flow Model ..................................... 11
The Leveraged Buyout Model ............................................ 12
The SML Approach ............................................................ 13
LBO Price ........................................................................... 14
Capital Structure Proposed ................................................. 15
Payback Period for Silver Lake .......................................... 17
Shareholders’ Approval ...................................................... 17
VERITAS Shareholders’ .................................................... 19
Seagate Shareholders’......................................................... 19
Conclusion .......................................................................... 20
Exhibits ............................................................................... 21
Interview with Dave Kahre, CPA....................................... 27
Interview with Chris
Cited: Eliott, Heidi. An Act of Privacy. Electronic News. April 3, 2000. Mintz, S.L. In VERITAS, a Good Price. CFO. June 1, 2000. 6th ed. Boston: McGraw-Hill, 2003. Sloan, Allan. A Deal with Taxing Consequences. Newsweek. June 5, 2000.