Perform a baseline valuation of seagates disk drive

Reference no: EM133715710

Question: Perform a baseline valuation of Seagate's disk drive business. You can assume that of the $765 million in cash that Suez Partners is getting, only $465 million is needed for working capital and that $300 million is excess cash.
Structure a transaction for Seagate's disk drive business. How much should Silver Lake bid for the business? How much leverage should Silver Lake employ if it targets at least a 35% return on its equity investments?
You should assume that Silver Lake plans to take the business public in 2006 and that they are targeting an investment grade credit rating on Seagate's debt by 2006 in order to facilitate the IPO.
To simplify your calculations, you should assume that the initial debt will not be refinanced until 2006. Furthermore, any future borrowing (prior to 2006) will occur at the same interest rate as the initial debt.

Reference no: EM133715710

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