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Seagate to buy Maxtor for $1.9 bln in stock
Wednesday December 21, 8:02 AM EST
NEW YORK (Reuters) - Seagate Technology (STX) on Wednesday said it would buy rival computer disk-drive maker Maxtor Corp. (MXO) for $1.9 billion in stock, aiming to cut combined costs and drive development of new products.
In the deal, expected to be completed in the second half of 2006, Maxtor shareholders will receive 0.37 shares of Seagate common stock for each Maxtor share they own.
At current prices, the transaction is worth about $7.25 a share for Maxtor investors, a premium of more than 60 percent to its closing price on Tuesday. Maxtor's stock has not traded in that range since June 2004.
Seagate shareholders will own about 84 percent and Maxtor shareholders about 16 percent of the new combined company.
The combination is expected to add 10 to 20 percent to Seagate's cash earnings per share after the first full year of joint operations, Seagate said in a release.
It also expects to hit $300 million of annual operating expense savings after the first full year of the combination.
Seagate said its executive management team will continue to serve in their current roles and the combined company will retain the Seagate name.
The deal comes as Maxtor, whose biggest customer is No. 1 personal computer maker Dell Inc. (DELL), has been restructuring and battling increasingly stiff competition.
Analysts have said Maxtor has been losing market share to competitors like Seagate and Western Digital Corp. (WDC) in consumer electronics, one of the fastest-growing businesses for computer storage companies.
"With the increased scale of the combined company, we can reduce overall product costs and provide more innovative products at more competitive prices," Bill Watkins, Seagate's chief executive, said in a statement.
Seagate also backed its earlier outlook for its second fiscal quarter of $2.2 billion in revenue and earnings per share in the range of 53 cents to 57 cents.
Seagate shares were not trading premarket, according to Inet. Maxtor shares rose $2.36 to $6.88.
http://67.19.9.2/?article=28482
Crap, less choice now.
Wednesday December 21, 8:02 AM EST
NEW YORK (Reuters) - Seagate Technology (STX) on Wednesday said it would buy rival computer disk-drive maker Maxtor Corp. (MXO) for $1.9 billion in stock, aiming to cut combined costs and drive development of new products.
In the deal, expected to be completed in the second half of 2006, Maxtor shareholders will receive 0.37 shares of Seagate common stock for each Maxtor share they own.
At current prices, the transaction is worth about $7.25 a share for Maxtor investors, a premium of more than 60 percent to its closing price on Tuesday. Maxtor's stock has not traded in that range since June 2004.
Seagate shareholders will own about 84 percent and Maxtor shareholders about 16 percent of the new combined company.
The combination is expected to add 10 to 20 percent to Seagate's cash earnings per share after the first full year of joint operations, Seagate said in a release.
It also expects to hit $300 million of annual operating expense savings after the first full year of the combination.
Seagate said its executive management team will continue to serve in their current roles and the combined company will retain the Seagate name.
The deal comes as Maxtor, whose biggest customer is No. 1 personal computer maker Dell Inc. (DELL), has been restructuring and battling increasingly stiff competition.
Analysts have said Maxtor has been losing market share to competitors like Seagate and Western Digital Corp. (WDC) in consumer electronics, one of the fastest-growing businesses for computer storage companies.
"With the increased scale of the combined company, we can reduce overall product costs and provide more innovative products at more competitive prices," Bill Watkins, Seagate's chief executive, said in a statement.
Seagate also backed its earlier outlook for its second fiscal quarter of $2.2 billion in revenue and earnings per share in the range of 53 cents to 57 cents.
Seagate shares were not trading premarket, according to Inet. Maxtor shares rose $2.36 to $6.88.
http://67.19.9.2/?article=28482
Crap, less choice now.
