OCZ reportedly in acquisition talks with Seagate, Micron

By on July 20, 2012, 7:30 AM

Rumors are circulating that OCZ is in talks with several industry giants about a potential buyout. According to Fudzilla's unnamed industry sources, Seagate is a likely buyer and would pay over $308.5 million, OCZ's Nasdaq value before the rumor was published (Seagate is valued at over $11 billion, for comparison). It's also believed that, if the deal were inked, OCZ would continue to exist as a brand within Seagate and it might even operate as a separate company. Micron was also named as a potential buyer.

The news gained steam following a Reuters report, in which analysts said a buyout would make sense. "I'm hearing the same rumors," said Shelby Seyrafi of FBN Securities, "I can only say that after the last quarter, when OCZ's cash situation became more challenging, they would be more willing to enter into a deal."

Gary Mobley of Benchmark Capital believes the acquisition would be possible for either Seagate or Micron, noting that "Seagate has been late to address the flash storage market and needs to hedge its aging HDD business" while "Micron would benefit from owning OCZ by selling more NAND flash."

Lazard Capital Markets' Edward Park also thinks it's plausible for Seagate to be considering the acquisition, because the company has made several moves signaling that it wants to gain traction in flash drive business. This includes a recent strategic agreement to develop enterprise and consumer SSDs with DensBits, a drive controller maker.

OCZ's shares rose 23% Thursday, adding about $69 million to its market value. The company had an iffy first quarter, posting a $6.3 million loss earlier this month. Revenue increased 54% to $113.6 million, but still fell short of the $115.7 million expected by analysts and narrowly met OCZ's own forecast of $110 million to $130 million. The outfit blamed supply chain problems for raising expenses in early 2012, but said those problems are solved.

OCZ and Seagate declined to comment, but Fudzilla believes an announcement could be made as early as next week.




User Comments: 8

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Darth Shiv Darth Shiv said:

Seagate?? Gah! Ironic that the least progressive storage company is considering buying the most...

ikesmasher said:

maybe if both of them started making more reliable products, I would care.

captainawesome captainawesome said:

this might not be a bad thing. the SSD market has plenty of competition as it is. And maybe the increased competition from a Seagate/OCZ merge will force prices down and others to compete.

Sniped_Ash said:

this might not be a bad thing. the SSD market has plenty of competition as it is. And maybe the increased competition from a Seagate/OCZ merge will force prices down and others to compete.
OCZ already prices their SSDs lower than pretty much everyone, but no other manufacturer should feel compelled to match them. OCZ's reputation is that their drives are not as reliable as others and that they do some shady stuff like the "Idilinx Everest is really a Marvell controller" thing and not distinguishing between their 25nm & 34nm drives.

spydercanopus spydercanopus said:

OCZ's Agility SSDs go out pretty fast but the warranty is 3 years. I wouldn't want to buy them, right now.

Ranger1st Ranger1st said:

This would be horrible, it's going to end up being the same situation that's now present in the mechanical HD world, 2 players that have a binary monopoly and can 'match price' with no need to compete. This is the same thing that can occur if all these SSD companies start to cash in like so many companies are want to do now. 2-3 years we'll see the end of competition 2-3 companies making SSD's of some ilk, higher prices, less innovation more 'match pricing'.

howzz1854 said:

F#$% Seagate, quick buying up and corrupting everything. bad enough that one brand is unreliable, now it plans to corrupt the whole storage industry.

Darth Shiv Darth Shiv said:

OCZ already prices their SSDs lower than pretty much everyone, but no other manufacturer should feel compelled to match them. OCZ's reputation is that their drives are not as reliable as others and that they do some shady stuff like the "Idilinx Everest is really a Marvell controller" thing and not distinguishing between their 25nm & 34nm drives.

The got spanked for both those. Was a PR bloodbath - I've bought products from them since but keep an eye out for this type of thing. SSDs are still bleeding edge.

Intel themselves as well as laptop manufacturers have caused many of the issues with SSDs in the first place. OCZ jumped in the deep end and at least got the tech to the mainsteam. Someone had to do it. Intel wouldn't fix the SATA 3 issues if there wasn't mainstream upcry and OCZ took the heat for everything (some of it was theirs and obviously some was not).

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