Seagate (NASDQ: STX) corporation, the parent of the company many people in IT and data storage in particular know as Seagate the disk drive manufacturer is moving their paper headquarters from the Cayman Islands where they have been based since 2000 to Ireland.
Let me rephrase that as Seagate is not moving their Scotts Valley California headquarters of operations or any design, manufacturing or marketing to Ireland that is not already there. Rather, Seagate as a manufacturing company is moving where it is incorporated (paper corporate headquarters) from the Cayman Islands to the Emerald Island of Ireland.
Do not worry, it is confusing at first. I ended up having to reread through the Seagate corporate material and remembering back to the late 1990s it all started to make sense. Seagate has over 50,000 employees located at facilities around the world including manufacturing, support, design, research and development, sales and marketing along with corporate administration among others.
Their business while focused on data storage currently is very much centered on magnetic disk drives with a much diversified portfolio including products obtained via their acquisition of Maxtor. The Seagate product portfolio includes among others high end enterprise class Fibre Channel and SAS 15,500 RPM (15.5K) high performance to high capacity SAS and SATA devices, 10K small form factor (SFF) to mid market, SMB, USB based SOHO, prosumer or consumer along with portable and specialized devices among many others including emerging SSD and hybrid devices.
However back in the late 1990s, Seagate ventured off into some other areas for a time being including owning (in part) Veritas (since divested and now part of Symantec), Xiotech (now back on its own under venture ownership including some tied to Seagate) among some other transactions. In a series of moves, merger and acquisition, divestures, restructuring, paper corporate headquarters that reads like something out of a Hollywood movie, Seagate ended up moving its place of incorporation to the Cayman Islands.
Seagate as it was known had essentially become the manufacturing company owned by a paper holding company incorporated off shore for business and tax purposes. Want to learn more, read the companies annual reports and other filings some of which can be found here.
The Business End of the Move
Without getting into the deep details of international finance, tax law or articles of business incorporation, many companies are actually incorporated in a location different from where they actualy have their headquarters. In the United States, that is often Delaware where corporations file their paper work for articles of incorporations and then locate their headquarters or primary place of business elsewhere.
Seagate SEC filing outlining proposed move
Outside of the United States, the Cayman Islands among other locations have been a popular location for companies to file their paper work and have a paper headquarters due to favorable tax rates and other business benefits. Perhaps you have even watched a movie or two where part of the plot involved some business transaction of a paper company located in the Cayman Island as a means of shelter business dealings. In the case of Seagate, in 2000 during a restricting their corporate (paper) headquarters was moved to the Cayman due to its favorable business climate including lower tax structure.
Disclosure: While I am a certified and experienced PADI SCUBA Divemaster having visited many different venues, Cayman Island is not one of them. Likewise, while I have distant relatives never meet, I would live to visit Ireland sometime.
Why is Seagate saying goodbye to the nice warm climate of the Cayman Islands heading off to the emerald Isle?
Simple, a more favorable business climate that include international business and taxation benefits as well as Ireland is not coming under scrutiny as a tax haven by the U.S. and other governments as have the Cayman Islands (along with other locations). Let me also be clear that Seagate is not new to Ireland having had a presence there for some time (See here).
What does all of this mean?
From a technology perspective pretty much nothing as this appears to be mainly a business and financial move for the shareholders of Seagate. As for impact on shareholders, other than reading through some documents if so inclined, probably not much impact if any at all.
As for IT customers, their solution providers who are customers of Seagate this probably does not mean anything at all as it should be business as usual.
What about others parties, governments, countries or entities?
Tough to say if this is a trend of companies that will begin moving their paper headquarters from the Caymans to elsewhere so as to escape being in the spotlight of U.S. and other governments looking for additional revenues.
Perhaps a boon to Ireland if more companies decide to move their paper as well as actual company operations there as many have done over the past decades. Otherwise for the rest of us, it can make for interesting reading, conversations, speculation, debate and discussion.
And that is all that I have to say about this for now, what say you?
Ok, nuff said.
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