Melissa Bockhold Heather Coddington - Franklin College

I. INTRODUCTION
In 1999, Seagate Technology, Inc., decided that in order to increase their market
value, they needed to make some big changes. Due to their undervalued stock price,
Seagate decided to undergo a leveraged buyout (LBO) with Silver Lake Partners L.P.
During this time, four main concerns arose among the parties involved:
• How can Seagate address the company’s low stock price?
• How should the buyout be financed? What should the capital structure look like?
• How much should investors pay to acquire Seagate’s disk drive operations?
• How can Seagate address VERITAS Software Corporation’s needs and concerns?
After analyzing the case and talking to executives at Silver Lake and Seagate, we
think that Seagate’s low stock price is best addressed by a leveraged buyout with a new
capital structure composed of 45% equity and 55% debt. Furthermore, we have found
that the company is worth approximately $2 billion in the buyout. Finally, VERITAS
should agree to participate in the deal because they will also win by retiring a portion of
their stock.
conclusions.
The subsequent sections of this report will further explain how we arrived at these
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