Seagate to buy Longmont’s Dot Hill Systems for $694 million

The higher estimate has been put at $9 price target with the lower price estimate is calculated at $7 Shares of Dot Hill Systems Corporation (NASDAQ:HILL) ended Tuesday session in red amid volatile trading.

Seagate is financing an all-cash transaction, paying approximately $694 million for Dot Hill, translating to roughly $9.75 per share.

That’s about 50 percent more than Dot Hill’s average stock price over the past three months.

Dot Hill specialises in SAN technology and offers a range of storage array-based systems integrated with its storage and data management software, which are tailored primarily to the needs of cloud and virtualised workloads.

Dot Hill, a maker of software and hardware storage systems, employs about 260 people in Longmont and about 70 in offices worldwide. Seagate will leverage Dot Hill’s storage technology IP portfolio and software capabilities to drive innovation and provide incremental value to their combined OEM customer base. Once it has been completed, Seagate will acquire the remaining shares not tendered in the tender offer through a second-step merger. The transaction is now expected to close during the fourth calendar quarter of 2015, subject to the satisfaction of customary closing conditions and the receipt of certain regulatory approvals, including those required by the Hart-Scott-Rodino Antitrust Improvements Act.

“We expect the transaction to be accretive to non-GAAP earnings in fiscal 2016”, Brace added.

For Dot Hill, the deal certainly makes sense when one considers the company’s struggles in recent years.

Seagate employed the services of Perella Weinberg Partners as financial advisor, and Wilson Sonsini Goodrich & Rosati as its legal advisors for the deal. Morgan Stanley and Needham & Company are working as financial advisors for Dot Hill with Cooley LLP signed for legal. Seagate said following the acquisition it will integrate Dot Hill’s portfolio into its cloud systems and electronics business. (NASDAQ:HILL) last announced its quarterly earnings results on Thursday, August 6th.