Posted on 12/21/2005 10:43:52 AM PST by ShadowAce
NEW YORK (Reuters) - Seagate Technology (NYSE:STX - news) on Wednesday said it would buy rival computer disk-drive maker Maxtor Corp. (NYSE:MXO - news) 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.
Maxtor shares rose 52 percent in premarket trade, according to Inet.
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. (Nasdaq:DELL - news), 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. (NYSE:WDC - news) 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.
There's got to be a way to spin this to badmouth President Bush, or free enterprise, or international trade. There's just got to be.
LOL!
I like both companies... not sure how to take this.
Maxtor helped drive prices down. Seagate was slow and overpriced.
Probably just lead to higher drive prices. It will be interesting to see what WD does.
Bush is a whore these big hard drive cartels. Now the big hard drive companies are a total monopoly. These are the hard drives used in those Diebold machines used to steal last elections. Slimey Bush.
Ummm... Seagate slow? remember the Cheetah 15K? also their Savvio 10K.1 isnt to shabby.
In my 20 years of computer experience, I have had the best results with Western Digital disk drives. I have replaced more failed Maxtor and Seagate disk drives than any other brands. IBM used to be good too. Don't know if they are since their disk drive division was bought by Hitachi.
And which IDE cable do I buy to hook these buggers up?
I would say that Maxtor scsi's are slow but the Seagates like to break.
I'm just not a happy guy ;-)
Got a bunch of Maxtor 250 G drives....they run great for me.....
"Maxtor shares rose $2.36 to $6.88."
This article would have been of more value yesterday! I always find out 24 hours too late!!!
I wouldnt mind getting a few of those 300GB maxtors what are they called diamond max 10's?
I'll bet Martha got a tip.
Oh yeah, George Clooney is already working on the script for a new movie: "Giant Magneto-Resistiana". One particularly telling line from a character in the script: Areal density is our protection. Areal density keeps us safe and warm. Areal density is why we win. From the players brokering back-room deals in Washington to the men toiling in the assembly plants of Mexico, the script's multiple storylines weave together to illuminate the human consequences of the fierce pursuit of sector caching and platter counts.
Good discussion on Slashdot on this today - One guy was saying that he liked this drive because they never died and hated this drive because they always died etc. etc.
Someone else came along and said that's not the way to look at it. Hard drives WILL fail eventually - the only solution is to back up your data and plan for that failure. No point in putting your faith in a superstition that X drive never fails.
Also another poster pointed out that look at the warranties that come with the drives. I think it was Seagate that came with a 5 year warranty (don't quote me on that) versus maybe a Maxtor that came with a 1 year warranty. But warranty length is a good indicator.
But in the end, you must back up your data. In fact one poster said that HD's are like toilet paper - disposable items that you plan on getting rid of. (If HD's are like toilet paper, then what is your data? He didnt' say.)
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