Storage giant Seagate Technology could spend $540 million on turning its secret minority holding in hard drive manufacturer Quinta into ownership, in order to control the start-up's advanced high capacity technology.
Under a new deal, Seagate will buy the Quinta stock it does not own for $230, write off up to $215 million in research and development costs and Quinta shareholders will be entitled to payments worth a further $95 million if technology and production targets are met.
Seagate bought an undisclosed stake in privately held Quinta for an secret amount earlier this year and sources said Seagate was prepared to spend "as much as it takes" to get Quinta's high capacity drive technology.
Michael Sklar, marketing director at Quinta, confirmed Quinta will become a Seagate subsidiary if shareholders approve the deal. He told 'VNU Newswire': "Seagate did not disclose how much of us they bought. The takeover will make no diffe, chairman and CEO Al Shugart said the takeover will allow Seagate to remain at the leading edge of technology and was a better option than developing its own technology or maintaining a minority stake.
Storage companies have recently tried to find new ways to place the device head as close as possible to the media, therefore increasing capacity, but Quinta develops 'optically assisted Winchester hard drives', which combine a high capacity drive with a lens that focuses a laser beam from the head on to the media. This means the drive can store vast amounts of data but has its head further away from the media, thereby the risk of damaging contact between the two and lowering costs.
Analysts agree there will no slowdown in demand for storage and backed Seagate's move to own high capacity drive technology.
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