LONGMONT — Seagate Technologies plc said Tuesday it plans to acquire Longmont-based data-storage firm Dot Hill Systems Corp. in an all-cash deal valued at $645 million.
Seagate (Nasdaq: STX), based in Cupertino, Calif., has a campus in Longmont at 389 Disc Drive that employs 1,380 people. Dot Hill’s (Nasdaq: HILL) headquarters is at 1351 S. Sunset St. with approximately 250 employees.
How the proposed acquisition will affect employees has yet to be addressed by either company.
The transaction is expected to close during the fourth quarter of 2015.
Seagate, a provider of data-storage solutions worldwide, said one of its wholly owned indirect subsidiaries will commence a tender offer for all of the outstanding shares of Dot Hill in an all-cash transaction valued at $9.75 per share, or a total of approximately $694 million on a fully-diluted equity-value basis. As Dot Hill has approximately $49 million in cash on its balance sheet as of June 30, the transaction reflects a value of approximately $645 million. Dot Hill’s stock closed trading Tuesday at $5.18 per share.
Dot Hill’s external storage array-based systems and software products will complement and expand Seagate’s storage-systems offerings and be offered as part of Seagate’s Cloud Systems and Electronics Solutions business, according to a joint statement.
Seagate will leverage Dot Hill’s portfolio of intellectual property and software capabilities to drive innovation and provide incremental value to its combined original equipment manufacturer customer base.
“Dot Hill’s innovative storage systems and IP portfolio are a strategic addition to our storage technology portfolio, enabling us to accelerate the growth of Seagate’s OEM-focused cloud storage system and solutions business,” said Phil Brace, president of Cloud Systems and Electronics Solutions at Seagate.
Dana Kammersgard, Dot Hill’s chief executive, said in a prepared statement that, “Seagate has a strong reputation in enterprise storage and is focused on building out its best-in-class storage system capabilities, making them the right home for the talented Dot Hill team. … Dot Hill’s customers will benefit from leveraging Seagate’s leading technology and infrastructure to accelerate the delivery of advanced solutions.”
The transaction has been unanimously approved by Dot Hill’s board of directors. The deal is subject to customary closing conditions, including a minimum tender of a majority of outstanding Dot Hill shares and the expiration or termination of any applicable waiting periods under competition laws.
Following the successful completion of the tender offer, Seagate will acquire all remaining shares not tendered in the tender offer through a second-step merger at the same price as to be paid to stockholders tendering their shares in the tender offer.
Seagate expects to finance the transaction from existing cash balances and the transaction is not subject to any financing conditions.
Perella Weinberg Partners served as financial adviser, and Wilson Sonsini Goodrich & Rosati served as primary legal adviser to Seagate in connection with the transaction. Morgan Stanley & Co. LLC and Needham & Company LLC served as financial advisers and Cooley LLP served as legal adviser to Dot Hill.