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Seagate buys out Maxtor

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Seagate (NYSE: STX) and Maxtor (NYSE: MXO) today jointly announced they have entered into a definitive agreement under which Seagate will acquire Maxtor in an all stock transaction. 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. 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...

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ARP has an article where Seagate answered some questions about the acquisition


Now, what does this mean for the market? The "loss" of a manufacturer like Maxtor would inevitably mean fewer choices in the market and less competition, potentially leading to higher prices. On the other hand, absorbing Maxtor may allow Seagate to reduce costs and pass the savings to customers.

More immediately, what would this merger mean to Maxtor customers? How much will they be affected as a result of Seagate's acquisition of the company that made their products? Will they still be entitled to the same warranty and service channels?

We had the opportunity to ask Seagate some questions about these questions. Let's take a look at what they had to say!

ARP : What will this mean for Maxtor? Will the Maxtor brand continue to exist?

Seagate : It's possible some of the branded solutions/retail products may maintain some Maxtor branding, but it's too early to tell. They're very strong in this space. We will retain the Seagate brand for all other products.

ARP : What will Seagate do with current Maxtor products? Will they be integrated into Seagate's product lines or phased out?

Seagate : Again, a little too early to tell, but we'll likely keep our line intact as they don't have any products that we don't already have.

ARP : What will Seagate's acquisition of Maxtor bring with it, in terms of technology and engineering expertise? Or did Seagate acquire Maxtor only for its manufacturing facilities, etc?

Seagate : They do bring engineering expertise, but primarily they have manufacturing assets that are particularly appealing.

ARP : How will this affect current Maxtor customers, as far as warranty and service & support are concerned?

Seagate : That will be figured out as we progress through the completion of the transaction.

ARP : What about current Maxtor distributors? Will they automatically become Seagate distributors, even in countries where Seagate has agreements with sole distributors?

Seagate : See answer above.

ARP : How will this affect Seagate's and Maxtor's workforce? Will there be any reduction in workforce?

Seagate : There is obvious overlap and redundancy. We'll address that as we get closer to the close. Seagate's management will remain in place. There are no planned Seagate workforce reductions as a result of this transaction.

ARP : How will this affect Seagate's and Maxtor's facilities? Will Seagate be closing any Maxtor facilities as a result of this merger?

Seagate : We'll integrate where it makes sense, primarily in China and their media facilities. Seagate's facilities will only be positively impacted by the acquisition.

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