Professional storage products supplier Seagate has agreed to purchase the assets of Maxtor, a provider of storage technology, in an all-stock transaction, valued at $1.9 billion. Seagate CEO Bill Watkins said the acquisition would enable his company to achieve greater scale, reduce supply chain costs, and leverage combined R&D efforts across a broader product set.
The transaction is expected to be complete in the second half of 2006, subject to obtaining shareholder and regulatory approvals. There is a termination fee of $300 million payable to Maxtor under certain conditions. Seagate and Maxtor will continue to operate as separate businesses.
The combination of both companies will lead to approximately $300 million of annual operating expense savings after the first full year of integration. The combined company will also be well positioned to accelerate delivery of a diverse set of cost-effective solutions for data storage products.
Seagate's executive management team will continue to serve in their current roles. The combined company will retain the Seagate name and executive offices will be located in Scotts Valley, CA.
For more information, visit www.seagatemaxtor.com.