Seagate Invited ValueAct To Become A Major Shareholder
In an unusual move, Seagate Technology Plc has invited ValueAct Capital in as an investor, selling a roughly 4 percent stake to the activist hedge fund. Seagate said that it has invited ValueAct to serve as an "observer on Seagate’s Board of Directors." The position will give ValueAct access to directors and their deliberations, but not voting power.
ValueAct will obtain 9.5 million Seagate shares through a so-called secondary block trade, the Seagate said. That means that rather than buying shares on the open market, it will exchange them with an existing Seagate investor, who was not identified.
The transaction is expected by the end of September.
"We are very pleased to have ValueAct Capital as one of our largest investors. Seagate approached ValueAct to execute this transaction and become an investor in our company, given their commitment to and success in creating long-term value for the companies in which they invest."
The normal activist engagement almost always involves the hedge fund approaching the company first. Companies often resist activist campaigns, which could include pressure for better cash management, leadership changes and new strategies. Sometimes the contention results in a proxy fight, where the hedge fund tries to replace board members with its own nominees.
Other tech industry investments by ValueAct include Microsoft, where it has a board seat. The firm also had a stake in Adobe Systems Inc that it sold.