Seagate takeover talks hang in the balance

The proposed takeover of Seagate by private equity firms including TGP and Bain Capital has run into financial difficulties, according to reports, raising the possibility of a bidding war.

A consortium headed by TPG had been in discussions to buy Seagate, which said that it was evaluating the offer and other "strategic alternatives".

Seagate shares fell by four per cent on Monday after Reuters reported that TPG's partners, Bain Capital and Kolhberg Kravis Roberts, had lost interest in the deal.

Toshiba is also believed to be a contender, according to the New York Post, having acquired Fujitsu's hard drive business last year.

Samsung could also launch a bid, as it has already worked closely with Seagate to jointly develop and cross license controller technologies for enterprise-level solid state drives (SSDs).

Rival storage firms Western Digital and Hitachi, meanwhile, could increase their market shares significantly if they acquired Seagate.

Seagate is the largest hard drive manufacturer in the world, and is valued at around $6bn (£3.74bn). The company was bought by Veritas Software for $20bn in 2000, but re-entered the public market two years later.

Demand for storage is moving away from traditional hard drives to SSDs, which could be one of the reasons why Seagate has yet to be acquired.

The market for enterprise SSDs is expected to rise from 150,000 units this ye ar to more than 4.1 million by 2015, according to research firm Objective Analysis.

V3.co.uk contacted Seagate, but the firm said it couldn't comment on the speculation.