Seagate downloads Maxtor for $2 billion

"Looks like the old adage — backup, backup, backup — still applies, no matter how big you are. Seagate, the world's largest hard-drive maker, is getting some extra storage space with one touch by picking up rival Maxtor for $1.9 billion. The merged company will operate under the Seagate name, and will presumably have a somewhat longer MTBF than the two companies would have had on their own."

The two storage companies said they hope to expand the range of products they offer, and will lead to $300 million in cost savings a year.

History has shown that when two hard disk drive makers merge, their combined revenue drops, the companies warned. Nevertheless, Seagate expects the deal to boost earnings per share by between 10 percent and 20 percent after the first year of joint operations.

The deal, unanimously approved by the both companies' boards of directors, will give Seagate shareholders control of about 84 percent of the combined company.


Seagate CEO Bill Watkins said: "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. We believe this is a strategic combination that will provide value for our shareholders as well as benefits for our customers."

Seagate's management team will remain in place, while Maxtor CEO C.S. Park will become a director of Seagate.