Seagate Acquires Maxtor

Seagate and Maxtor, producers of hard disk drives from the U.S., announced Wednesday that they had signed an agreement under terms of which the former would acquire the latter. The announcement continues the consolidation trend of hard drive manufacturers and outlines just how complex the business is.

Under the terms of the agreement, which has been approved by the boards of directors of both companies, Maxtor shareholders will receive 0.37 shares of Seagate common stock for each Maxtor share they own. When the transaction is completed Seagate shareholders will own approximately 84% and Maxtor shareholders will own approximately 16% of the combined company. The value of the transaction is approximately $1.9 billion.

The transaction is expected to be completed in the second half of calendar 2006, subject to obtaining shareholder approvals and customary regulatory approvals. There is a termination fee of $300 million payable to Maxtor under certain conditions. The transaction is intended to be tax-free to Maxtor shareholders. Prior to the closing, Seagate and Maxtor will operate as separate businesses.