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Filed By VERITAS Software Corporation
Pursuant to Rule 425 under the
Securities Act of 1933
And deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
Subject Company: Seagate Technology, Inc.
Commission File No. 001-11403
VERITAS SOFTWARE CORPORATION
CONFERENCE CALL CONCERNING
MULTI-COMPANY TRANSACTION INVOLVING SEAGATE TECHNOLOGY, INC.
AND VERITAS SOFTWARE CORPORATION
CONFERENCE CALL
MARCH 29, 2000
OPERATOR: Ladies and gentlemen, thank you for standing by. And welcome to the
Seagate Technology news conference call. At this time all participants are in a
listen only mode. Later we will conduct a question and answer session with
instructions being given at that time. If you should require assistance please
depress * followed by 0. As a reminder this conference is being recorded.
I would now like to turn the conference over to Mr. Steve Luczo, President &
Chief Executive Officer of Seagate Technologies. Please go ahead.
STEVE: Thanks James. Okay, first of all I just want to say good afternoon, and
thanks everybody for joining the call on relatively short notice. And I am going
to introduce at least a few people that are on the phone. There are a wide
variety of people available to answer Q&A, but along with myself is Mark Leslie,
Chairman & CEO of Veritas Software. Larry Perlman, Co-Chairman of Seagate
Technology. Roger McNamee, Co-Founder of Silver Lake Partners. Charles Pope, CFO
at Seagate Technology. And Ken Lonchar, CFO of Veritas Software.
We are going to walk through the details of today's announcement, and then
entertain questions before concluding the call, in about an hour. And I will
apologize up front to everyone for probably tending to read more than normal,
but given the extensive nature of the announcement we want to make sure that all
the information is as accurate and consistent as possible, so bear with me.
Before moving on to the details of the transaction, though, I would like Charles
to cover the language concerning forward looking statements within the Safe
Harbor Provisions. And so, Charles, if you would go ahead with that.
CHARLES: Thanks Steve. Today's report contains forward looking statements within
the meaning of the Safe Harbor Provisions of the Private Securities Litigation
Reform Act of 1995. Such statements are based on the current expectations and
beliefs of management of Seagate and Veritas Software, and are subject to a
number of factors and uncertainties that could cause actual results to differ
materially from those described in the forward looking statements, including the
risks detailed in today's press release.
For a detailed discussion of risks and uncertainties please refer to the joint
proxy statement or prospectus to be filed with the Securities & Exchange
Commission by both Seagate and Veritas Software, as well as the company's filing
with the Securities & Exchange Commission. Especially in the factors affecting
future operating results section of the management discussion and analysis of
financial condition and results of
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operations section of Seagate's Form 10K for its fiscal year ended July 2, 1999,
and its form 10Q for its fiscal quarter ended December 31, 1999. And in the
factors that may affect future results section of the management discussion and
analysis of financial condition and results of operations section of Veritas
Software's Form 10Q for its fiscal quarter ended September 30, 1999. Neither
company undertakes any obligation to update forward looking statements to
reflect events or circumstances after the date thereof.
Steve.
STEVE: All right. Thank you Charles. Seagate and Veritas Software and an
investment group led by Silver Lake Partners that includes Seagate Management
and Texas Pacific Group today announced a landmark $20 billion transaction. In
the transaction Veritas Software will acquire all of Veritas Software shares
currently held by Seagate, certain investment securities and cash. The investor
group will acquire the Seagate operating businesses for cash. Seagate
stockholders will receive shares of Veritas Software common stock and cash
for their shares of Seagate common stock.
For Veritas Software the transaction is accretive earnings per share
primarily by decreasing total shares outstanding. In addition, the transaction
eliminates the share overhang of Seagate's approximate 33% ownership in Veritas
Software and increases stockholder liquidity.
For Seagate the transaction unlocks the value of Seagate's assets on a tax
efficient basis for the benefit of its stockholders.
In this unified transaction Veritas Software will merge with Seagate, which will
then exclusively hold 128 million shares of Veritas Software, the investment
securities of SanDisk, Gadzoox Networks, CVC, and Dragon Systems, and
cash.
Immediately prior to this merger a new company formed by an investor group led
by Silver Lake will purchase all of Seagate's operating businesses for
approximately $2 billion in cash. We are creating the largest private company in
Silicon Valley by nature of this transaction. By taking Seagate private we will
be able to pursue investments in our core operating business with financial
partners of a long-term perspective and with a real understanding of the
challenges of the disk drive industry.
The Seagate Board of Directors has been exploring a variety of options for
unlocking the value of the company's assets, including its Veritas holdings, and
feels that the proposed transaction, which includes the sale of Seagate's
operating assets to the Silver Lake Partners investment group and provides for a
26% premium over the 30-day average Seagate share price, achieves that goal.
As background, Seagate acquired approximately 155.6 million shares of Veritas
Software common stock on a split adjusted basis following the completion of
Veritas Software's acquisition of Seagate Software's Network & Storage
Management Group in May of 1999.
Today Seagate owns approximately 128 million shares of Veritas Software common
stock, representing 32.5% of the Veritas Software outstanding common stock. The
transaction amount today redistributes this block of Veritas Software more
broadly into the market.
In the transaction the Seagate stockholders will receive merger consideration
consisting of 109.3 million Veritas Software shares issued for the approximate
128 million Veritas Software shares that Seagate presently owns, additional
Veritas Software shares issued for the investment securities, and at Veritas
Software's election for up to $750 million in retained cash, and all cash on the
Seagate balance sheet in excess of $800 million cash working capital, and after
given the affect of the Veritas Software retained cash, debt repayment, taxes,
and other liabilities.
Seagate stockholders would receive total consideration of approximately $77.50
per share for each share of Seagate common stock, consisting of approximately
.467 Veritas Software shares and approximately $5 in cash, based on the closing
market prices of the investment securities as of March 28, 2000. And assuming a
$500 million cash retention by Veritas Software and Seagate's anticipated cash
position at closing.
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The transaction unveiled today represents a significant event for Seagate, our
stockholders, our employees, and Veritas stockholders. The transaction is
structured so that the issuance of the Veritas Software shares should be
tax-free to the Seagate stockholders. Seagate stockholders may also be entitled
to receive additional cash payments for tax refunds at or after closing. The
final amount of additional Veritas Software shares and cash per share will be
determined at closing, and will depend on a number of factors including the
final cash position of Seagate and the market prices of the involved securities.
The Seagate operating business is not being acquired by Veritas. We are taking
the operating business private in order to more aggressively pursue our
objectives as the world's leading storage company.
Mark.
MARK: Thank you Steve. I would like to talk about our general perspective on
this transaction. We think that the deal makes great sense for both Veritas and
its shareholders. And the total estimated value of the recapture to Veritas is
approximately $3 billion based on current market prices. We will receive the 128
million shares of our stock held by Seagate and up to $750 million in additional
cash for operations and strategic investments.
Of the total consideration approximately two-thirds will be realized in a
reduction of our number of shares outstanding. This reduction will be about 12
million shares, caused by the fact that we will only issue approximately 116
million shares as compared to the 128 million shares that we are receiving from
Seagate which will boost our EPS. In addition, Veritas will receive Seagate
stock in CVC, Gadzoox, SanDisk, and Dragon Systems, representing a net value
after tax and assumed liquidity discount of approximately one-sixth of the total
consideration. This will diversify the Veritas Software holdings and contribute
to the long-term stability of the Veritas Software stock.
Finally, ten days before the close of the transaction we may elect to further
reduce Veritas shares outstanding or to receive the remainder of the
consideration in cash completing the last one-sixth of the total. It is
important to note that with a fixed exchange ratio which locks in accretion this
transaction has no collar.
We also have the added benefits of increasing our available float for
approximately 57% to 99%, further contributing to the long-term stability of our
stock and making it easier for investors to buy and sell our stock in sizable
volumes as well as removing the overhang issues represented by Veritas Software
stock held by Seagate, significantly reducing the risk that those shares end up
in the hands of another company.
This transaction presents Veritas Software with between a half a billion and a
billion in additional liquid assets to fund innovative technologies and to fund
new ventures that will contribute to growing the value and market position of
the company. This cash may be deployed as we focus on our high priority
initiatives identified for 2000 and beyond. These key initiatives include
developing technologies and market for internet infrastructure products, the
network attached storage market, professional services, the Hewlett Packard
platform market, and our own e-business initiative.
Ken.
KEN: Thanks Mark. I would like to review the impact of this transaction with
respect to Veritas financial results. From a financial viewpoint there is
nothing but goodness in this deal for the Veritas stockholders. The value is
very accretive to our future results. I believe that this transaction is
accretive to earnings per share right out of the box, and we should see just
over 10% accretion in the second half of this year. And in 2001 about 7.5%. This
accretion is most properly viewed by a two-pronged calculation. First, we will
be reducing shares outstanding, as discussed earlier. But equally as important,
we will also be earning interest on the invested cash that we receive as part of
this transaction by providing additional net income.
Roger will now review the general perspective from the transaction from the
viewpoint of Silver Lake.
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Roger: Good afternoon. I would like to just say on behalf of the investor group
that is participating in this transaction that we believe in the strategic
nature of data storage in the internet economy. And we are proud to partner with
the management and employees of Seagate. This is a dynamic time in the storage
business. It is a challenging environment, but at the same time storage we
believe is a critical technology for the new economy. We share management's
long-term vision, and we are prepared, and in fact excited about making all of
the necessary investments to ensure that Seagate remains the leading player in
storage systems.
Now, with respect to the transaction, we are pleased to play a role in a deal
which provides such clear benefits to three parties. To Seagate shareholders, to
the shareholders of Veritas, to Seagate management employees and customers. This
is really a tremendous transaction, and something that we are very, very excited
about.
Our team is committed to the core business. We understand and support the
Seagate strategy, and frankly, our team has a very long history of investing not
only in technology but in the storage industry. And so let me tell you a little
bit about this investor team. It starts and is led by Silver Lake Partners which
is a $2.3 billion private equity fund focused exclusively on technology. Our
team which consists of Jim Davidson, formerly of Hambrecht & Quist, Dave Roux,
formerly of Oracle and Lotus, Glenn Hutchins, formerly of Blackstone Group, and
Integral Capital Partners, the firm that I founded with John Powell and Kleiner,
Perkins, Caufield & Byers.
We are really delighted to be joined in this investor group, as I said, by the
management team at Seagate, and by a really stellar group of investors. Texas
Pacific Group is our partner in this deal. They are a $7 billion private equity
firm. Very experienced investors both in technology and in other sectors of the
economy led by David Bonderman and James Coulter. Some of their technology
investments include on semi conductor and globe span semi conductor.
The other investors in this team include August Capital led by Dave Marquardt
who was a very early venture investor in Seagate and remains one of the most
prominent people in technology investing. The other investors include Chase
Capital Partners, GS Capital which is a group within Goldman Sachs, and my other
firm, Integral Capital Partners. And as I said, the Seagate management team is
integral to this program.
Let me now turn the podium back over to Steve.
STEVE: Thanks a lot Roger. So let me just provide an overview of the principal
terms of the agreement. The transaction will be affected in two nearly
simultaneous steps. In the first step a new private company formed by financing
group led by Silver Lake Partners will purchase all of Seagate Technology assets
and liabilities for cash, excluding the holding in Veritas Software, CVC,
Gadzoox Networks, SanDisk, and Dragon Systems. The new private company will
assume the name Seagate Technology and a new board of directors will be formed
consisting of Seagate executive management members, members of the investor
group, and new outside directors.
Immediately following step one, the remaining assets of Seagate Technology will
be acquired by Veritas Software through a merger of Seagate with a wholly owned
subsidiary of Veritas Software. These remaining assets consist of the cash
proceeds from the Silver Lake Partners transaction, the 128 million shares of
Veritas Software common stock, and Seagate Technology's holdings in CVC, Gadzoox
Networks, SanDisk, and Dragon Systems.
In step three, Veritas will issue approximately 109.3 million Veritas shares to
Seagate stockholders, and this will effectively reduce the number of shares of
Veritas common stock by approximately 18.7 million shares and provide Veritas
with the ability to retain up to $750 million in cash and Seagate's investment
securities.
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The details of this transaction will be represented in their entirety including
risk factors in the proxy statement filed with the SEC. However, the following
are key highlights of the transaction, some of which we've already covered.
Veritas will be acquiring all 128 million shares by issuing 109.3 million new
shares of Veritas common stock currently held by Seagate to provide Veritas with
the ability to retain up to $750 million in cash and Seagate's investment
securities. Any retained cash and the agreed value of securities will be
converted into additional Veritas shares, and Seagate stockholders will receive
approximately .467 shares of Veritas common stock and approximately $5 in cash
for each Seagate share based on the stock prices of Veritas as of the close of
March 28, 2000. And assuming a $500 million cash retention by Veritas Software
and Seagate's anticipated cash position at closing.
And so what is the investor group buying? Just to give you some of the different
perspectives between the investor group and Veritas. The investor group is
buying Seagate's core business including our disk drive, tape drive, and
components business, including all of our operating assets and liabilities. It
is also buying Seagate Software, the Internet Solutions Group including Ziotech
Corporation, Server Appliance Group, and the Consumer Solutions Group, and all
other Seagate minority investments.
Veritas is buying all the approximately 128 million shares of Veritas Software
stock now held by Seagate, the securities of SanDisk, Gadzoox, CVC, and Dragon
Systems currently held by Seagate, and retained cash.
The transaction makes sense for Seagate stockholders because they will receive
Veritas Software stock plus cash in exchange for their Seagate stock at an all
time high value for Seagate shares. That value represents a 26% premium for the
30-day average share price, and it effectively unlocks the value of Veritas
Software stock held by Seagate and the core Seagate business. The issuance of
the Veritas Software stock and Seagate stockholders is intended to be tax-free.
The transaction makes sense for Seagate's management, employees, customers, and
suppliers because it allows Seagate to return to a highly focused core business
strategy, to allow Seagate to invest based on long-term strategies and
objectives, and it allows Seagate employees to participate in a private company
equity.
Mark, did you want to go into more detail on the benefits to the Veritas
shareholders?
MARK: Sure. Let me just kind of give you an overview. I don't want to be overly
redundant here, but let me just for completeness go through this.
There is $3 billion of value recapture, and there are certain elements of the
agreement that puts some variables in here. But approximately $2 billion in
cashless share repurchase and approximately $1 billion in cash and securities
infusion. We expect at the end of the day to reduce the share count by 12.5
million shares. We expect it to be accretive to operations at 7% to EPS in the
year 2001. We keep the Veritas shares that Seagate owns out of unfriendly hands,
one of the concerns that you have in the back of your mind is that they could
get acquired by someone else and that that someone else may not be someone that
we particularly want to have a whole bunch of shares and sit on our board. It
removes the Seagate overhang which generates a broad distribution of unlocked
shares, and increases our float from 67% to 99%. The exchange ratio locks in the
accretion. The transaction has no collar. And Veritas never owns the disk drive
business.
And so, that is from our point of view, and we think that it is a fabulous
transaction.
STEVE: Okay, and so again, thanks Mark. And just in terms of strategy going
forward, you know, clearly from the Seagate disk drive perspective, operating
businesses that the goal is to remain the leader of supplier storage technology.
We believe that we have structured the transaction in a way that provides us
with the financial resources to continue to maintain our leadership position in
technology at the device level and at the component level. We will continue to
pursue our leadership position in business intelligent software. We believe that
we can accelerate the core business improvement in terms of technology
leadership, time to market leadership, advanced manufacturing, operating
efficiencies driven from
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initiatives such as supply chain management and six sigma. And it gives us an
opportunity to accelerate the business potential that we have in emerging
markets in the commercial and consumer marketplaces.
In summary, it is a significant advance for Seagate stockholders and employees,
and Veritas stockholders. We feel that the transaction announced today is
structured to unlock the value of Seagate's assets to its stockholders. And for
Veritas the transaction is accretive, and by decreasing the total number of
shares outstanding and earned interest on any cash retained. In addition, the
transaction eliminates the shareholder overhang of Seagate's approximate 33%
ownership in Veritas and increases stockholder liquidity.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The foregoing information contains forward-looking statements within the meaning
of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of
1995. Such statements regarding, among other things, the timing, effect, and
potential value of the transaction, are based on the current expectations and
beliefs of managements of Seagate and VERITAS Software, and are subject to a
number of factors and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements. In
particular, the following factors, among others, could cause actual results to
differ materially from those described in the forward-looking statements: the
failure of the transaction to close due to the failure to obtain regulatory or
other approvals; the failure of the transaction to close due to the failure of
Silver Lake Partner's financing source to fulfill certain financial commitments;
the failure of the Seagate or VERITAS Software stockholders to approve the
merger; the risk of unanticipated costs of effecting the transaction; the risk
that liabilities will arise and the new private company will be unable or
unwilling to satisfy its proposed indemnification obligations to VERITAS
Software; the risk that the economic terms of the transaction will vary
substantially due to changes in the market prices of VERITAS software or the
investment securities and the impact of the operations of Seagate and the
resulting cash balances at closing; and the risk that the Internal Revenue
Service will determine that the transaction is taxable to the Seagate
stockholders.
For a detailed discussion of these and other cautionary statements, please refer
to the joint proxy statement/prospectus to be filed by both Seagate and VERITAS
Software as described below, as well as the companies' filings with the
Securities and Exchange Commission, especially in the "Factors Affecting Future
Operating Results" section of the Management's Discussion and Analysis of
Financial Condition and Results of Operations section of Seagate's Form 10-K its
fiscal year ended July 2, 1999 and its Form 10-Q for its fiscal quarter ended
December 31, 1999, and in the "Factors That May Affect Future Results" section
of the Management's Discussion and Analysis of Financial Condition and Results
of Operations" section of VERITAS Software's Form 10-Q for its fiscal quarter
ended September 30, 1999.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
Investors and security holders of both Seagate and VERITAS Software are advised
to read the joint proxy statement/prospectus regarding the business transaction
referenced in the foregoing information, when it becomes available, because it
will contain important information. Seagate and VERITAS Software expect to mail
a joint proxy statement/prospectus about the transaction to their respective
stockholders. Such joint proxy statement/prospectus will be filed with the
Securities and Exchange Commission by both companies. Investors and security
holders may obtain a free copy of the joint proxy statement/prospectus (when
available) and other documents filed by the companies at the Securities and
Exchange Commission's web site at http://www.sec.gov. The joint proxy
statement/prospectus and such other documents may also be obtained from Seagate
or VERITAS Software by directing such requests to the respective investor
relations contacts listed below.
Seagate and its officers and directors may be deemed to be participants in the
solicitation of proxies from Seagate's stockholders with respect to the
proposed transaction. Information regarding such officers and directors is
included in Seagate's proxy statement for its annual meeting of stockholders
filed with the Securities and Exchange Commission on October 4, 1999, and in its
S-4 Registration Statement, as subsequently amended, on September 3, 1999. These
documents are available free of charge at the Securities and Exchange
Commission's web site at http://www.sec.gov and from the Seagate investor
relations' contacts listed below.
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VERITAS Software and its officers and directors may be deemed to be participants
in the solicitation of proxies from VERITAS Software's stockholders with respect
to the proposed transaction. Information regarding such officers and directors
is included in VERITAS Software's S-1 Registration Statements filed with the
Securities and Exchange Commission on September 22, 1999, as supplemented. This
document is available free of charge at the Securities and Exchange Commission's
web site at http://www.sec.gov and from the VERITAS Software investor relations'
contacts listed below.
FOR MORE INFORMATION CONTACT:
SEAGATE TECHNOLOGY VERITAS SOFTWARE
Media Relations Media Relations
- --------------- ---------------
Julie A. Still 831-439-2276 Erin Jones 805-783-4528
Julie_a_still@notes.Seagate.com erin.jones@VERITAS.com
- ------------------------------- ----------------------
Forrest W. Monroy 831-439-2838 Rebecca Glenn 650-318-4362
Forest_w_monroy@Seagate.com rebeca.glenn@VERITAS.com
- --------------------------- ------------------------
Philip D. Montero 831-439-2862 Martha Blackwell 805-782-4175
Philip_d_montero@notes.Seagate.com martha.blackwell@VERITAS.com
- ---------------------------------- ----------------------------
Investor Relations Investor Relations
Bill Rowley 831-439-2371 Dave Galiotto 650-318-4047
Bill_Rowley@notes.Seagate.com dave.galiotto@VERITAS.com
Denise Franklin 831-439-2789 Borah Kim 650-318-4514
Denise_franklin@notes.Seagate.com borah.kim@VERITAS.com