The world's top maker of computer disk-drives, Seagate Technology Inc. (NYSE: SEG), said Friday it would revamp its software unit and acquire all shares in the subsidiary that it does not already own.
Shares in Seagate Technology closed at 34 Thursday, down from their 52-week high of 44 1/4.
Seagate Technology expects charges of about $216 million during the quarter in which the reorganization closes. The move is the latest in ongoing efforts by Seagate to revamp its business and improve its cost structure amid pricing pressure and excess production that are plaguing the disk-drive industry. The Seagate will issue roughly 8 million shares to acquire Seagate Software.
The troubled company stumbled recently over missed estimates in its fourth quarter. Before that, it had already sunk on a profit warning, which cited competitive pricing in the disk-drive industry for its problems.
Seagate Software's assets consist of the Information Management Group, or IMG, business as well as shares of Veritas Software Corporation (Nasdaq: VRTS) stock. In the reorganization, Seagate Software's stockholders and will be paid in Seagate Technology common stock. Seagate has formed a new subsidiary for the IMG assets.
Proceeds from sales of Veritas stock will be used by Seagate Technology to fund its core business and other projects, according to the company release.
Seagate Software shareholders have to approve the plan.