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Seagate buys storage developer

The storage giant expands its minority stake in Quinta, buying it outright for $230 million in cash.

Seagate Technology (SEG) today announced a $230 million cash acquisition of Quinta, a developer of high-capacity drive technologies.

Seagate, which previously had a minority stake in Quinta, has been interested for over a year in the optical and magnetic technologies that Quinta develops, said Seagate CEO Alan Shugart.

The deal, awaiting final approval by both companies? boards, consists of a cash payment to Quinta shareholders of $230 million upon closing, and additional payments of up to $95 million upon the achievement of product development milestones.

"Last quarter we were looking to do one of three things: invest in a company, buy a company, or start our own effort in [developing ultra-high-capacity drive technologies]," Shugart said. "We decided that the best of the three options was to totally own something, and Quinta wanted to be a part of Seagate."

Seagate develops and manufactures products for storing, managing, and accessing digital information. The company had $9 billion in revenue last year.

Quinta hopes its optically assisted Winchester technology will be able to support high-density recording and reading on a range of hard drives. Quinta has applied for several patents related to storage technology.

Analysts were supportive of the acquisition.

"It's positive for Seagate, it brings them a technology that was developed outside and that they can commercialize," said Jean Orr, an analyst with A.G. Edwards. "As the demand for additional capacity continues to grow, it?s an advantage to have the highest-capacity disk drives."

Quinta will initially operate as a wholly owned subsidiary of Seagate. Shugart likened the transition to the hand-over of Hong Kong to the Chinese government.

"The British flag came down, the Chinese flag came up. It?s kind of the same thing here--as for later integration, we don?t know. But we?re very excited about it," he said.