TPG, Silver Lake Held Early Talks On Seagate-Source

(Reuters) – Private equity firms TPG CapitalLP and Silver Lake Partners held early stage talks about buying Seagate Technology Plc, but it is unlikely that it will result in a deal, a source familiar with the situation said on Tuesday.

Hard-drive company Seagate Technology has a market capitalization of about $5.3 billion. News of the talks was earlier reported by Bloomberg.

If such a deal had been clinched, it would have been one of the biggest leveraged buyouts of the year. Private equity deal flow contracted after the credit crisis limited access to financing, but they have been increasing this year. Many funds are sitting on large amounts of capital to invest and eager to put money to work.

Talks did not falter because of a lack of ability to get financing, the source said.

A number of large buyouts have been mulled this year, but not reached the finish line. A consortium that included TPG considered buying Fidelity National Information Services Inc in May, but pulled out because of disagreement over price. A leveraged buyout for payment processing firm Fidelity could have been worth around $15 billion.

Seagate could be viewed as a potentially good company to take private because its stock trades at a historically low price-to-earnings ratios, despite the fact it faces less hard-drive industry competitors than it had in years past.

As a result of the lower number of competitors, Seagate and the drive industry as a whole is better able to scale back supply to meet demand and avoid the pitfall of falling prices, analysts say.

Seagate shares closed up 1.21 percent at $11.43.