Mergers, Acquisitions, Alliances and Synergies Case Study

Case Title:

Seagate’s Acquisition of Maxtor: Strengthening Storage leadership?

Abstract:
Seagate Technology planned to maintain and possibly expand its leadership in the disk drive segment by the acquisition of Maxtor Corporation in 2005. The identity of the disk drive business was centered on a squeeze between thin margins and a voracious appetite for R&D dollars. Seagate’s additional purchasing potential from Maxtor’s customers would bring in a larger revenue flow to support its vision of R & D.The deal worth US$1.9 billion would probably give Seagate a steady revenue stream from enterprise products and more strength to battle in other emerging and promising storage market segments. Maxtor on the other hand was going through a financial crisis since 2004. Seagate seized the opportunity and took over Maxtor. The acquisition to be completed in 6 months by May, 2006 intended to strategically place Seagate to take advantage of Maxtor’s presence in segments where it performed better. Will Seagate’s acquisition of Maxtor pay off? Will it be able to strengthen its storage leadership with this acquisition? Was it inescapable that Seagate had no other choice than to expand, and that acquiring Maxtor, probably its most closely matched contender, was a matter of competitive necessity? Could this "necessity" translate into an advantage for Seagate?

Pedagogical Objectives:

• To understand Seagate’s strategy to emerge as global leader in hard disk drive industry
• To understand Seagate’s expansion strategy
• To understand the features of the hard disk drive industry
• To understand M&A strategy in the Hard Disk Drive Industry.

Keywords :  Seagate;Mergers,Acquisitions,Alliances Case Study; Maxtor; Bill Watkins; C S Park; Acquisition; Hard drive Industry; Storage Industry; Storage Leadership; Market share; Global presence; Financial crisis