Seagate Technology PLC (NASDAQ:STX) announced on Friday that it sold around 4% stake to the activist hedge fund ValueAct Capital. After taking more stakes in Seagate, ValueAct Capital become one of the largest shareholders of the company and got an observer board position.
Seagate Technology announced a block trade transaction of around $12.5 million, which is expected to close by the end of this month. In the transaction, Seagate Technology and ValueAct Capital will buy 12.5 million ordinary and existing shares, $9.5 million of which will be bought buy ValueAct Capital.
In addition to the transaction, Seagate Technology also invited ValueAct Capital to be an observer on the board. The position will give ValueAct Capital an access to the directors and board’s deliberations. However, ValueAct will not have voting power on the board.
“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,” Steve Luczo, the Chief Executive Officer of Seagate Technology, said on Friday.
Before adding stakes in Seagate Technology, ValueAct Capital invested $1.1 billion in Morgan Stanley. The company said it also invested $111 million in Trinity Industries Inc in July.
Seagate Technology had a hard time in the past months. The company said it cut about 6,500 jobs in July after announcing reducing 1,600 positions two weeks earlier. In August, earnings of Seagate fell 49%. The company suffered from decreasing demand for personal computers that use the products of Seagate.
Shares of Seagate Technology increased 0.8% to $36.60 per share in midday trading Friday.