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CALIFORNIA: Seagate and Maxtor have entered into a definitive agreement under which, Seagate will acquire Maxtor in an all-stock transaction, valued at $1.9 billion.
Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Maxtor shareholders will receive .37 shares of Seagate common stock for each Maxtor share they own.
As a result of the merger the company expects to maximize operational efficiencies, and realize significant cost synergies, stated a company press release.
The combined company is expected to generate significant synergies, and the transaction is expected to be at least 10-20% accretive to Seagate on a cash EPS basis after the first full year of combined operations.
The combined company expects to achieve approximately $300 million of annual operating expense savings in connection with the transaction after the first full year of integration.
“Seagate is excited about the opportunity to achieve greater scale, reduce supply chain costs, and leverage combined R&D efforts across a broader product set. With the increased scale of the combined company, we can reduce overall product costs and provide more innovative products at more competitive prices,” said Bill Watkins, Seagate CEO.
“We believe this is a strategic combination that will provide value for our shareholders as well as benefits for our customers.”
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, California.
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