Seagate gets the go-ahead on Samsung integration

October 23, 2015 // 11:56 a.m.

Tags: #anti-monopoly #business #china #financial #hard-drive #mechanical-hard-drive #ministry-of-commerce #mofcom #monopoly #samsung #seagate

Storage giant Seagate has received the go-ahead it needed to fully integrate Samsung's hard drive business from the Chinese Ministry of Commerce (MOFCOM).

Seagate announced its intentions to buy Samsung's hard drive business way back in 2011, offering $1.375 billion in stocks and shares and leaving Samsung as a ten per cent shareholder in Seagate. An additional aspect of the deal gave Seagate preferential status for the supply of Samsung's NAND flash chips, for integration into Seagate's long-delayed solid-state storage products - a product line former chief executive Bill Watkins had forced the company to ignore as being unlikely to sell in quantity, a short-sighted prediction echoed by his successor Steve Luczo in 2010.

The deal, however, required a number of regulatory approvals - and Seagate has only now, four years after the agreement was signed, received approval from China's MOFCOM. In its ruling, the ministry confirmed that it would relax the 'hold separate' restrictions which had previous compelled the company to operate Samsung's hard drive division as a separate subsidiary. The removal of this restriction allows Seagate to begin merging Samsung's hard drive business into its own, though there are still two requirements outstanding: Seagate must not force customers into exclusivity by preventing them from buying products from other vendors, and it must not use its mighty purchasing power to compel TDK China to sell its mechanical hard drive heads to the company exclusively, locking rivals out of the supply chain.

'Today’s decision marks an important step forward for Seagate, as we continue to evolve our strategy to meet the dynamic demands of the storage industry,' claimed Luczo, current chair and chief executive officer of Seagate. 'We were pleased by the constructive dialogue we had with MOFCOM throughout this process, which reflects in part our strong long-term presence, significant ongoing investment, and deep relationships in China, and we look forward to finalising the integration of Samsung’s HDD business.'
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