In a transformative step for its business strategy, Seagate Technology has made headlines by announcing its acquisition of Intevac, a producer of critical hard drive equipment, in an all-cash deal valued at $119 million. The company will be offering $4 per share in a tender offer directed at Intevac’s shareholders, who are set to receive a premium for their investments. This acquisition strategy targets an initial aim of controlling more than half of Intevac’s outstanding shares, which will facilitate a subsequent merger to acquire the remaining shares.
Intevac: A Brief Background
Intevac, which made its debut in the public market back in 1995, has its origins as a spin-off from the technology giant Varian Associates. Since then, it has established itself as a reputable manufacturer of thin film deposition systems, which are integral for improving the functionality of hard drive disk media. The company’s geographical expansion includes key markets such as China and Malaysia, indicating its solid global presence. The recent spikes in its revenue—we are talking about a significant 59% year-over-year growth in its latest fiscal quarter—give a glimpse into its capability for adapting to market demands despite facing challenges like a net loss of $2.17 million.
One of the highlights of this acquisition is its potential to enhance Seagate’s hard drive technology portfolio. Intevac specializes in heat-assisted magnetic recording (HAMR), a cutting-edge technology that significantly enhances storage density and writing efficiency of hard drives. Seagate’s own foray into HAMR technology, marked by the announcement of their first HAMR-based hard drive last December, aligns perfectly with Intevac’s expertise. By acquiring Intevac, Seagate is not just gaining equipment but also a wealth of technological know-how that could secure its competitive edge against rivals like Western Digital and Toshiba, who are also ramping up their efforts to develop HAMR-based drives.
The storage industry is currently experiencing a surge in demand, particularly driven by public cloud vendors looking for cost-effective storage solutions. The feasibility of HAMR-based drives in this context cannot be overstated, given their cost advantages over solid-state technologies. This timely acquisition is well-received not only by Intevac’s board of directors and shareholders, who have unanimously approved the deal, but it also sets the stage for Seagate to further solidify its position in the evolving landscape of data storage.
The closing of this acquisition, anticipated for late March or early April, will mark a significant milestone in Seagate’s 46-year history of strategic acquisitions—this being the first major one since its purchase of Kioxia in 2017. With a historical tally of 11 acquisitions, amounting to approximately $18 billion, this merger further embodies Seagate’s intent to innovate and grow in an intensely competitive market. The integration of Intevac could potentially yield not only improved technological capabilities but could also revitalize Intevac’s strategic direction, moving the company towards increased profitability and reduced reliance on public market fluctuations.
Seagate’s acquisition of Intevac represents a bold strategic move, with far-reaching implications for both firms as they navigate the future of data storage technology.