Maxtor Corporation and Quantum Corporation today announced a definitive agreement to combine Maxtor and Quantum HDD, Quantum’s Hard Disk Drive Group, in an all-stock transaction that will create the world’s leading disk drive company.
Quantum’s HDD stockholders will receive 1.52 shares of Maxtor common stock for every share of HDD common stock they own. Based on the current market capitalisations of Maxtor and Quantum HDD, the transaction is valued at approximately $2.3 billion.
To be named Maxtor Corporation, the combined company will be led by Mike Cannon, Maxtor’s current president and chief executive officer. At closing, on a pro forma basis, the company will have a combined ship rate of more than 50 million hard drives annually for use in a broad range of desktop personal computers, Intel-based servers, and consumer electronics applications.
In addition, Maxtor’s Network Systems Group, which is currently shipping a family of network-attached storage (NAS) products under the MaxAttach brand, will be part of the combined company.The transaction is expected to be tax-free to Maxtor, Quantum, and their respective stockholders and will be accounted for under the purchase method of accounting. Earnings per share are projected to become accretive in early 2002. It is expected that the merger of Quantum HDD and Maxtor will generate annualised cost savings of $120 million to $200 million within 18 to 24 months following completion of the transaction.
The transaction, which was unanimously approved by the boards of directors of both companies, will create an enterprise with annual sales of approximately $6 billion and with one of the strongest balance sheets of any publicly held disk drive company.
Quantum’s DLT & Storage Systems Group which is not involved in the Quantum HDD/Maxtor transaction, will operate as a legally separate, standalone company that will be known as Quantum Corporation.
Stockholders of Quantum DSS, which like Quantum HDD is a tracking stock of Quantum, will receive on a one-for-one basis shares of the then-independent company comprising all of the operations and assets of the current Quantum DLT & Storage Systems Group. Additionally, DSS will incur special accounting charges upon completion of the transaction related to conversion of Quantum employee stock options.
The company will maintain Quantum’s current strategic relationship with Matsushita-Kotobuki Electronics Industries, Ltd. (‘MKE’) and also continue to utilise Maxtor’s current manufacturing capability, including its manufacturing facilities in Singapore.
More on the web at www.maxtor.com.