Rumor: Seagate May Acquire OCZ; Stocks Soar

Reuters reports that shares of OCZ Technology Group spiked as much as 21-percent in early trade thanks to a rumor sparked by Fudzilla. The site claims that rival Seagate Technology has offered to buy the SSD maker for an undisclosed amount.

According to the Fudzilla report, "industry sources" claim that Seagate is one of many looking into a possible acquisition of OCZ. The HDD company reportedly plans to offer much more than the $308.5 million that Nasdaq currently values OCZ, which seems like mere chump change compared to Seagate's Nasdaq value of $11.71 billion.

If true, the rumored move would certainly accelerate Seagate's progression into the SSD market which has thus far been slow at best and rather late to the game. OCZ, which considers itself as the SSD expert, is somewhat years ahead of where Seagate needs to be. It realized the market shift years ago and quickly transformed itself from a core RAM company to one of today's premier SSD manufacturers.

For Seagate, this acquisition would make sense, even more so as the industry shifts away from platter-based storage solutions. Experts claim the OCZ acquisition will boost Seagate's margins and help it establish a firmer foothold in the lucrative enterprise segment. Meanwhile, OCZ would benefit from Seagate's massive capital that would enable the SSD company to meet consumer demand, a problem OCZ has reportedly encountered in the past.

It's also believed that Seagate will likely keep the OCZ brand if the SSD company is brought in-house. Yet there's a possibility that OCZ could continue on as a separate company -- yet still owned by Seagate -- in order to prevent disrupting its current momentum on the SSD market.

"It is plausible for Seagate or Micron to buy an SSD company," Benchmark Capital analyst Gary Mobley said. "Seagate has been late to address the flash storage market and needs to hedge its aging HDD business. Micron would benefit from owning OCZ by selling more NAND flash."

The Fudzilla report claimed that Micron is one of the companies considering an OCZ acquisition.

According to Reuters, shares of OCZ, which was valued at $308 million as of Wednesday's close, were trading up 22-percent at $5.57 on the Nasdaq. Thursday's gains added about $68 million to its market capitalization.

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  • ko888
    What will happen to the OCZ power supply division and also PC Power & Cooling?
  • bryonhowley
    What will happen to the OCZ power supply division and also PC Power & Cooling?
    My guess would be that they would continue to run as a subsidiary of Seagate.
  • spartanmk2
    Reminds me of Vivendi and Activision Blizzard...
  • leo2kp
    Not sure what to think about this. Didn't realize OCZ was in need of a buyer or would even want something like this. Someone explain this to me!
  • freggo
    Would give OCZ access to substantial funding of course.
    Use of Segate's distribution channels, manufacturing expansion and resulting increased sales may lead to lower prices.
  • verbalizer
    OCZ quality will go back up I hope and maybe fix the bugs with the Vertex series in the process.
    I wish them luck.
  • Stardude82
    leo2kpNot sure what to think about this. Didn't realize OCZ was in need of a buyer or would even want something like this. Someone explain this to me! OCZ's board could reject this unsolicited offer if the offered price isn't view as sufficient to be in the best interest of the shareholders. But, this is what is normally called a takeover. In principle, anybody with enough capital could just buy 50%+1 share (or whatever according to corp. gov. rules) and takeover the board of directors and replace the company's management. Though generally, its the case that a purchasing company will swap the disappearing stock in exchange for the purchaser's stock by the consent of the company's governing board or through a shareholder's referendum. In this case, I imagine the board will take a premium excess in Seagate stock to offset the faster growing potential of the OCZ stock, which in the short term benefits share holders and leads people buying up stock in the run up to such a merger, hence the jump in the OCZ stock price.
  • s3anister
    The last thing we need is homogenization of the solid state storage market to happen. As things stand now prices are low because there are so many manufacturers competing against each other.

    I really don't want to see the SSD market turn into another Seagate vs. Western Digital.
  • slabbo
    seagate and western digital are way behind in the SSD market. Not surprising that one is jumping to buy up a SSD manufacturer. They pretty much have to, or get left behind and eventually put under. I'm just surprised that WD hasn't made the move first.

    PS: might wanna look into buying stocks of other SSD manufacturers, like Kingston, Sandisk, Crucial...etc.
  • hannibal
    Well it would allso allow some new ssd upgraded hybrid drives with bigger ssd part?... But hard to say what would happen to competition... There are so many players in SSD market that I don't think that this would affect SSD prices. OCZ is not the most aggressive in that front (allthough it have had guite competative prices). But if if we ever get in the same situation that is in HD segment (only two players) there is allways a posibility that prices can climp up...