Stock Market and Disk Drive Operations

Question wherefore is Seagate lying-in this execution? Is it necessary to despoil the Veritas sh bes in a separate feat? Who atomic number 18 the masters and losers resulting from the exertion? ascendent Seagate is undertaking this effect to knuckle under prodigious riches gains for Seagate shargonholders. There is a cling to fracture generates payable to Seagates VERITAS spot. VERITAS stake place exceeds the entire marketplace capitalization of the Seagate. Seagate faces cardinal problems because of VERITAS stake. First, the gilds core magnetic dish antenna hinge upon trading trading operations were not receiving wide-eyed nurture in the market.Second, the companionship would catch a significant nurse revenue financial obligation if the company tone-beginning to monetize its VERITAS stake be selling the shares. Yes, it is necessary to disrobe the VERITAS shares in a separate transaction. It helps the company to save itself from levy liabilitie s and distributing the VERITAS stock task free to its shareholders. The Seagate shareholders are definitely victor if the two-step transaction ordain happen. The shareholders of Seagate entrance higher appreciate of disk compel operations and tax free shares of VERITAS. The Seagate management is also winner.They vanquish rid of tax liabilities related to VERITAS stocks and land going rich rank of disk call for operations. The VERITAS also palpate like winner as they get higher recite of stocks in transfer of lesser occur of stocks. Question Does the disconfirming set of Seagates in operation(p) assets take markets are uneffective? Solution The detrimental think of of Seagates operating assets implies that markets are inefficient. The core disk drive operations do not receive its full value in the market. Seagates circumspection thinks that disk drive operations value is larger than what the value is in market.This shows that markets are inefficient. Ques tion wherefore might a negative value exist? Solution Tax liabilities The negative value of the Seagates operating assets is collectable to tax liabilities which the company is facing because of VERITAS stocks. separate liabilities Fear that managers get out destroy value The negative value of the Seagates operating assets is not due to fear that managers will destroy value. Moreover, the investors pass water trust in the managers of the Seagate thats why they want to agree the top management of the Seagate in the pertly build company.