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Analysts Comment on Xyratex Acquisition Bids, Shares Continue to Gain

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Brean Capital analyst Ananda Baruah noted that there is room for higher rival bids for Xyratex Ltd. (NASDAQ: XRTX) within a $14.00 to $18.00 range.

On Tuesday, Seagate Technology (NASDAQ: STX) offered to buy Xyratex for $13.25 per share. Baruah reported that there is less than a 50% chance for rival bids above $13.25 per share. Despite this statistic, the analyst noted that there is room for higher bids with a "fair value" range between $14.00 and $18.00.

Brean Capital reported the chance of a rival bid for Xyratex by Western Digital (NASDAQ: WDC) is less than 50%. Baruah commented that Western Digital is likely to remain a Xyratex customer short-term but may shift to Teradyne Inc. (NYSE: TER) for HDD testing long-term.

Earlier, Pacific Crest analyst Weston Twigg noted that Teradyne will likely benefit from an acquisition of Xyratex by Seagate. Twigg commented that Xyratex is Teradyn's primary competitor in HDD test equipment and the Xyratex acquisition should aid in Teradyne's relationship with Western Digital and possibly with Toshiba.

Shares of Xyratex jumped 27.27% yesterday following the company's agreement to be acquired by Seagate Technology for approximately $374 million in cash. Xyratex shares fell 0.15% to $13.28 in the after-hours trading session, while Seagate shares rose 0.02% to $56.02 in after-hours trading. In the first ten minutes of trading this morning, Seagate shares are down 0.21% and shares of Xyratex are up 0.83%.

Latest Ratings for XRTX

DateFirmActionFromTo
Oct 2012Cantor FitzgeraldMaintainsHold
Sep 2012Cantor FitzgeraldMaintainsHold
Jul 2012BMO CapitalMaintainsMarket Perform

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Posted-In: Ananda Baruah Brean Capital Pacific Crest Weston TwiggAnalyst Color Analyst Ratings

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