[Posted on November 27, 2007 - 3:18 PM]
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DiggXiotech Corp. said Tuesday that the storage area networking company has raised $40 million in a deal fronted by Steve Luczo, chairman of the board of Seagate Technology. Luczo will also join Xiotech's board of directors in the latest episode of an eight-year soap opera that has gone on between Seagate and the storage specialist. The deal comes just two weeks after Luczo sold Seagate's Advanced Storage Architecture, or ASA, group to Xiotech and five years since Xiotech was formed by the executive in a spinoff to an investor group led by Oak Investment Partners.
But wait, there's more.
Before investing in Xiotech, Luczo had reservations about the company when it was part of Seagate. Meanwhile, the disk-drive giant has its own tortured relationship with Xiotech, which it bought in 1999 for $360 million. This 2002 story from Oak Invesment's Web site speculates that Seagate sold Xiotech to Oak for a paltry $32 million in order to move the company and its $51 million in 2001 losses off its books as Seagate prepared to go public. (A buyout group including Silver Lake Partners LP and TPG took Seagate private again in November 2000 before the company went public in 2002.)
At the time of Seagate's spinoff of Xiotech, Venture Capital Analyst noted that Oak negotiated a careful partition of intellectual property in securing the deal, which took a year to close. Still, the investment firm failed to meet its original expectations of getting to profitability on the $60 million it pumped into Xiotech.
Commenting on Seagate's sale of its ASA group, ChannelWeb Network's storage blog remarked earlier this month that the hardware company and Xiotech have had a "funny financial relationship" over the years. But the web gets even more tangled when you try to pick apart the relationship between Seagate and Oak, and the relationship Luczo now enters as a lead investor in Xiotech's new financing. - Clifford Carlsen
See Nov. 27 press release from Xiotech
See December 1999 story from TheDeal.com
See Nov. 7 post from ChannelWeb
