Seagate Technology snaps up Dot Hill Systems in premium deal

Seagate Technology snaps up Dot Hill Systems in premium deal

We are focused on providing the highest quality storage systems for our OEM customers and Dot Hill’s storage solutions will enable us to advance our strategic efforts. Seagate, engaged in a long-term market-share battle with Western Digital and SanDisk, figures to obtain a significant market advantage by adding Dot Hill’s 87 patents, loyal clientele, and longtime industry know-how into its mix. The business’s quarterly revenue was up 27.6% compared to the same quarter a year ago. Dot Hill was advised by Morgan Stanley & Co. The 52 week high share price is 9.7 Dollars while the year low share price is now 3.14 USD. Before this evening’s jump, Dot Hill stock was up 17% this year and 48% in the last 12 months.



The per share price is an 88 percent premium to where Dot Hill’s stock closed Tuesday, at $5.18.

Seagate said Dot Hill’s external storage array-based systems and software products will become part of Seagate’s Cloud Systems and Electronics Solutions business.

“While we do see rationale for a competing bidder to enter, we put it at a very low probability”, Maxim Group analyst Nehal Chokshi wrote in a Wednesday note.

-Seagate’s solid liquidity and financial flexibility are supported by $2.5 billion of cash, the vast majority of which is readily accessible without adverse tax considerations, an undrawn $700 million senior secured revolving credit facility due January 15, 2020, Fitch’s expectations for $800 million to $1 billion of annual free cash flow (FCF), and a staggered debt maturity schedule. Roth Capital began coverage on shares of Dot Hill Systems Corp.in a research note on Wednesday, June 3rd.

A number of other analysts have also issued reports on HILL. The stock has an average rating of “Buy” and an average target price of $8.58.

Dot Hill Systems Corp (HILL) current short interest stands at 1.22 million shares. They set a “buy” rating and a $8.50 price target for the company. While the company was consistently successful in the OEM storage business, its 3-year-old branded product line had some difficulty getting traction. The Server OEM segment consists of Original Equipment Manufacturers (OEM) who purchases products from the Company to sell along with server products.

Dot Hill CEO Dana Kammersgard said in the statement that Seagate has a strong reputation in enterprise storage and Dot Hill’s customers will benefit from leveraging Seagate’s leading technology and infrastructure.

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