If you are looking for a new tech investment, then this news will be interesting for you. Marketwatch reports that:
Late last month, Seagate, along with a number of other companies led by Bain Capital, signed a deal with the embattled Japanese industrial conglomerate for its booming memory-chip business in a deal with worth $18 billion.
The news coincides with a fantastic earnings report for Seagate, which saw their stock rise by over 13% on Monday.
While the earnings report may have earned short term traders a pretty penny, Seagate seems to have positioned themselves to take over an even larger market share of the chip business. However, it may not be as soon as people thought according to Reuters:
Seagate Technology, a member of the group taking over Toshiba Corp’s chip unit, pledged not to buy any stake in the unit for 10 years as part of the $18 billion deal, showed a document from group leader Bain Capital LP reviewed by Reuters.
Reuters goes on to explain that this clause was enforced by one of Toshiba’s partners, Western Digital who compete with Seagate.
Despite the fact that the deal will only allow Seagate to fully acquire Toshiba’s chip business, the company has removed one of its main competitors. In addition, the company has the potential to add a massive amount of growth when the deal does finally kick in in 2027.
Investors should give Seagate a look if they are interested in a long term investment. While a lot may change during this time frame, the company looks like they are on track for a strong quarter after such a strong earnings report.
To read Marketwatch’s article about Seagate’s earnings, click here.
To read Reuters’ article about the inner working of the Seagate/Toshiba deal, click here.
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