UPDATE 1-TPG,Silver Lake held early talks on Seagate-source

Tue Sep 21, 2010 6:46pm EDT

 * TPG, Silver Lake looked at buying Seagate -- source
 * Unlikely that talks held will result in deal -- source
 (Adds background, industry, other deals, shares)
 NEW YORK, Sept 21 (Reuters) - Private equity firms TPG
CapitalLP [TPG.UL] and Silver Lake Partners [SILAK.UL] held
early stage talks about buying Seagate Technology Plc (STX.O),
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 (FIS.N) 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.
  (Reporting by Megan Davies; additional reporting by Alex
Dobuzinskis; editing by Robert MacMillan and Andre Grenon)




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