Two of the industry's leading hard drive makers recently announced that they are teaming up to create a new company that will produce more than 50 million hard drives per year.
The Maxtor and Quantum desktop hard drive businesses will become Maxtor Corp. The all-stock transaction is valued at about $2.3 billion. Michael A. Brown, chairman and CEO of Quantum, says the new Maxtor is "going to be the premier drive company in the industry."
Maxtor's current president and CEO, Mike Cannon, will head the new corporation. Brown will join the new company's board of directors. Cannon estimates that it will take about 18 months to complete the integration, and says he foresees a 10 percent reduction in workforce because of the reshuffling.
The remaining parts of Quantum storage business, including the market-leading DLT tape line, will remain a separate company retaining the name Quantum.
The boards of both companies unanimously agreed to the deal. Quantum's Hard Disk Drive (HDD) Group stockholders will receive 1.52 shares of Maxtor common stock for every share of HDD common stock they own.
Cannon says, "The combined company will have the financial resources, product breadth, and intellectual property to capitalize on the future explosive growth of storage at both the storage device and subsystem levels." He estimated growth of about 15 percent per year. The company expects total sales to reach $6 billion annually.
Brown says he will not speculate about what effect the merger could have on current hard drive prices, which have been in a sharp nosedive for years. Analysts say that the desktop PC market has matured, forcing price wars between competing companies.
Like Quantum, Veritas and Seagate recently split apart their enterprise and desktop hard drive businesses. Seagate, which owned Veritas, spun the storage management vendor and took the desktop hard drive business private.
Hyundai Electronics America, which owns a 35 percent stake in Maxtor, indicated in writing that it supports the merger
The Maxtor and Quantum desktop hard drive businesses will become Maxtor Corp. The all-stock transaction is valued at about $2.3 billion. Michael A. Brown, chairman and CEO of Quantum, says the new Maxtor is "going to be the premier drive company in the industry."
Maxtor's current president and CEO, Mike Cannon, will head the new corporation. Brown will join the new company's board of directors. Cannon estimates that it will take about 18 months to complete the integration, and says he foresees a 10 percent reduction in workforce because of the reshuffling.
The remaining parts of Quantum storage business, including the market-leading DLT tape line, will remain a separate company retaining the name Quantum.
The boards of both companies unanimously agreed to the deal. Quantum's Hard Disk Drive (HDD) Group stockholders will receive 1.52 shares of Maxtor common stock for every share of HDD common stock they own.
Cannon says, "The combined company will have the financial resources, product breadth, and intellectual property to capitalize on the future explosive growth of storage at both the storage device and subsystem levels." He estimated growth of about 15 percent per year. The company expects total sales to reach $6 billion annually.
Brown says he will not speculate about what effect the merger could have on current hard drive prices, which have been in a sharp nosedive for years. Analysts say that the desktop PC market has matured, forcing price wars between competing companies.
Like Quantum, Veritas and Seagate recently split apart their enterprise and desktop hard drive businesses. Seagate, which owned Veritas, spun the storage management vendor and took the desktop hard drive business private.
Hyundai Electronics America, which owns a 35 percent stake in Maxtor, indicated in writing that it supports the merger
