Data storage company Seagate has announced its intention to acquire Intevac, a hard drive equipment producer, in an all-cash deal worth $119 million. The acquisition is expected to strengthen Seagate's position in the growing storage market, particularly in the area of hard drive disk production.

Under the terms of the agreement, Seagate will pay $4 per share in a tender offer for Intevac, which is publicly traded. The company will initially purchase a minimum of "at least one share more than 50%" of Intevac's issued and outstanding shares, and then execute a "second step" merger to acquire the company's remaining shares. Intevac's board of directors and largest shareholders have unanimously approved the transaction, which is expected to close in late March or early April, subject to customary closing conditions.

Intevac, founded in 1991 as a spin-off from tech firm Varian Associates, manufactures thin film deposition systems that support hard drive disk media production and the upgrade of existing hard drive systems. The company has expanded its footprint over the years to territories including China, Malaysia, and Singapore. One of the technologies that Intevac touts as its preferred solution is heat-assisted magnetic recording (HAMR), which improves the "writeability" and storage density of hard drives by applying heat energy.

The acquisition is a strategic move by Seagate to bolster its hard drive capabilities, particularly in the area of HAMR technology. In December, Seagate announced its first HAMR-based hard drive after a two-decade hiatus from the tech, and the company plans to ship HAMR-based drives to several customers, including a "leading cloud provider," this year. The demand for HAMR-based drives is growing, driven by the increasing need for storage in the public cloud sector.

Seagate's rivals, including Western Digital and Toshiba, are also working on HAMR-based drives, highlighting the competitive landscape in the storage market. HAMR-based drives generally have a cost advantage over incumbent solid-state technologies, making them especially attractive to public cloud vendors.

Intevac's market cap was around $91.17 million as of Thursday, and the company reported $28.5 million in revenue in its most recent fiscal quarter (Q3 2024), up 59% year-over-year. However, the company posted a $2.17 million net loss during the same period. Intevac had been exploring "strategic options" and undergoing a restructuring that the company anticipated would "materially strengthen its profitability." One of those strategic options was an exit from the public markets, which now appears to be the case.

The acquisition of Intevac is Seagate's first major acquisition since the company bought Kioxia, a supplier of flash memory and solid-state drives, in 2017. According to financial database Tracxn, Seagate has made 11 acquisitions in its 46-year history, totaling around $18 billion.

The deal is expected to have significant implications for the storage market, as Seagate continues to expand its capabilities in the hard drive sector. With the growing demand for storage in the public cloud sector, the acquisition of Intevac is a strategic move by Seagate to strengthen its position in the market and stay competitive with its rivals.

In the broader context, the acquisition highlights the ongoing consolidation in the storage market, as companies seek to expand their capabilities and stay competitive in a rapidly evolving industry. As the demand for storage continues to grow, it will be interesting to see how Seagate's acquisition of Intevac plays out in the coming months and years.