Samsung will receive a windfall of $1.5 billion after accepting stock from Seagate Technology as partial payment for its hard-disk drive business two years ago.
The electronics giant sold the unit to Seagate in April 2011 for $1.375 billion, $687.5 million in cash and $687.5 million in stock. Under the terms of the agreement, Samsung owned nearly 10 per cent of Seagate and the two companies cross-licensed a number of patents. The deal closed in December 2011.
The sale also prompted the two companies to begin co-developing enterprise storage products.
While Samsung's unit was a loss maker at the time, Seagate's shares have since more than doubled, which has resulted in a substantial financial reward for Samsung, which has now agreed to sell part of its stake back to the Dublin-based firm.
According to a press release, Samsung will sell back 32.7 million shares, representing roughly nine percent of Seagate's total shares. The South Korean firm will still own approximately 12.5 million shares, which is worth just over $560 million.
Steve Luczo, Seagate Chairman, President and Chief Executive Officer commented:
"Returning value to shareholders is also a top priority for Seagate and investing in our own company is one of our greatest opportunities today. Given the strength of our balance sheet and expected cash flow from operations, we remain committed to our share redemption and dividend plan.
With this transaction, we are on track to meet our stated goal of returning approximately 70 percent of operating cash flow to shareholders this fiscal year while at the same time we continue to make strategic investments in our business to extend our leadership in cloud, mobile and open source storage technology."