Disk-drive makers Maxtor and Quantum to merge

ITworld.com –

Maxtor Corp. and Quantum Corp. agreed Wednesday to combine Maxtor and Quantum HDD, Quantum's hard drive unit, in an all-stock transaction. The companies' boards have agreed to the merger, but stockholders must still approve the deal, which may also come under scrutiny from regulatory groups.

The merger would create the world's largest disk drive company, surpassing the longtime king of the hill, Seagate Technology.

The deal is valued at about $2.3 billion. The companies estimate a combined annual ship rate of more than 50 million hard drives, and an annual revenue run rate of about $6 billion. The deal could cap a genuine turnaround for Maxtor, which struggled to compete with Seagate and Quantum in the mid-'90s.

Maxtor and Quantum have both experienced financial difficulties in recent years. The pairing may better enable them to compete in a disk drive business where technology limits are pushed and profit margins are sorely stressed.

The company will retain the name Maxtor Corporation and will be led by Mike Cannon, Maxtor's current president and CEO. Michael Brown, chairman and CEO of Quantum, will join the new company's board of directors.

"The combined company will have the financial resources to capitalize on the future explosive growth of storage at both the storage device and subsystem levels," said Cannon.

While the new company would surpass Seagate in hard-drive revenue and units shipped, Seagate would still maintain a lead in enterprise drive shipments, said John Monroe, chief analyst for rigid disk drives at Gartner Group's Dataquest division. Enterprise drives go into enterprise storage servers, which are produced by EMC Corp. and others.

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