$1.38 billion deal leaves Toshiba looking vulnerable

Seagate snaps up Samsung hard drive business

Following hot on the heels of news that Korean electronics giant Samsung was looking to dispose of the firm’s hard drive business, Seagate has been confirmed as a buyer.

The $1.38 billion deal in cash and stock is the latest in a round of consolidation as an increasingly tough market forces the major plays to sell out or buy out in order to reach competitive economies of scale.

Last month world number one Western Digital snapped up enterprise specialist Hitachi GST in a massive deal worth $4.3 billion, taking the firm’s total market share to just under 50 per cent. Toshiba acquired Fujitsu’s hard drive business back in 2009.

Samsung held around 10 per cent of the market so a consolidated Seagate-Samsung hard drive division will now account for around 40 per cent, hopefully achieving economies of scale which will allow the firm to perform better than it has of late.

The acquisition is also part of a wider alliance between the two firms as Seagate agrees to provide Samsung’s range of notebooks and PCs with hard drives and Seagate agrees to buy Samsung NAND flash to be used in Seagate manufactured solid state drives.

The recent rounds of hard drive player consolidation will put increased pressure on the smallest remaining manufacturer Toshiba, particularly since the firm’s hard drive business was already experiencing widening losses.

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