segate1 - it attempted monetize VERITAS stake by selling...

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Why is Seagate undertaking the transaction of a leveraged buyout (LBO)? Segate is undertaking a leveraged buyout as a way of generating a significant wealth gain for Segate shareholders. The need to proceed and take some action was evident when VERITAS stock price had significantly increased and the market value of Segate's VERITAS stake started to greatly exceed Segate's entire market capitalization. Segate's management attributed this gap in value to two factors. The first was that they company would incur a substantial tax liability if
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Unformatted text preview: it attempted monetize VERITAS stake by selling shares and the liability was capitalized in Segate's stock price. Second, Segate's core disk driver operations were not receiving full value in the stock market. The proposed transaction of a leverage buyout would allow Segate shareholders to realize full value for the company, by distributing VERITAS stock free, and by selling disk drive operations at fair market value....
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