Seagate plans on spending $119 million to buy Intevac, a maker of sputtering tools used to coat disk drive platters with thin films.
Intevac’s 200 Lean machine applies thin films, formed from microscopic particles, to disk drive platters to create PMR and HAMR recording medium coatings. In the sputtering process, atomic particles are ejected from a source material when it is bombarded with energy of a particular kind, and the particles land on a platter’s surface. Its main customer for this tool is Seagate and it also counts Resonac (Showa Denko as was) and Western Digital as its customers. Resonac counts Toshiba as a customer.
Seagate and Intevac have entered into a definitive agreement for Intevac to be acquired by Seagate in an all-cash $4/share deal.
Intevac will pay a one-time special dividend of $0.052 per share, which makes the deal worth $4.102/share to Intevac stockholders. This is a premium of 45 percent to Intevac’s closing price of $2.83 per share on December 11, 2024, a date on which Intevac said it was pursuing strategic options. Intevac ran into serious problems when a TRIO generalized glass substrate coating business expansion effort was closed down. It decided to retreat to its core HDD sputtering tool business and look for a buyer or partner.
Seagate will now launch a $4/share all-cash tender offer for all of Intevac’s outstanding shares “as promptly as reasonably practicable,” it said.
Seagate needs to have more HAMR sputtering capacity as it increases HAMR drive production. Wedbush analyst Matt Bryson told subscribers the deal could: “Reduce [Seagate’s] capital costs given the need to update equipment to accommodate HAMR.” It signals Seagate’s confidence in its HAMR technology.
Bryson suggests this deal could also hinder moves into HAMR technology by both Toshiba and Western Digital, by reducing the availability of sputtering machinery, given that they wouldn’t necessarily want to buy from Seagate.
However, either Western Digital or Resonac or both could object to the deal on reduced competition grounds, which could delay its completion, or even prevent the transaction taking place. We imagine Seagate’s legal team have already examined and discounted this extreme possibility.
The transaction is expected to close in late March or early April 2025, subject to the satisfaction of customary closing conditions. Seagate says it will be accretive to its earnings in the future.
