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Maxtor-Quantum HDD unit's merger expects $6 billion in annual sales

The Maxtor-Quantum Hard Disk Drive merger, with a combined ship rate of more than 50 million hard drives annually, is positioned to capitalize on the growth prospects in the storage space.
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Written by Brills Rebeiro on
MILPITAS, Calif. - Maxtor Corporation (NASDAQ: MXTR) and Quantum Corporation (NYSE: DSS)(NYSE: HDD) today announced a definitive agreement to combine Maxtor and Quantum HDD, Quantum's Hard Disk Drive Group, in an all-stock transaction that will create the world's leading disk drive company.

Quantum's HDD stockholders will receive 1.52 shares of Maxtor common stock for every share of HDD common stock they own. Based on the current market capitalizations of Maxtor and Quantum HDD, the transaction is valued at approximately $2.3 billion.

To be named Maxtor Corporation, the combined company will be led by Mike Cannon, Maxtor's current president and chief executive officer.

At closing, on a pro forma basis, the company will have a combined ship rate of more than 50 million hard drives annually. In addition, Maxtor's Network Systems Group, which is currently shipping a family of network-attached storage (NAS) products under the MaxAttach brand, will be part of the combined company.

According to Mr Cannon, this combination of resources is also expected to reduce duplicative expenses, and with the anticipated operational efficiencies resulting from this transaction, they will be able to generate the profits necessary to fund expanded research and development.

It is expected that the merger of Quantum HDD and Maxtor will generate annualized cost savings of $120 million to $200 million within 18 to 24 months following completion of the transaction. The transaction, will create an enterprise with annual sales of approximately $6 billion.

Quantum's DLT & Storage Systems Group (NYSE: DSS), which is not involved in the Quantum HDD/Maxtor transaction, will operate as a legally separate, standalone company that will be known as Quantum Corporation.

The company will maintain Quantum's current strategic relationship with Matsushita-Kotobuki Electronics Industries, Ltd. ("MKE") and also continue to utilize Maxtor's current manufacturing capability, including its manufacturing facilities in Singapore.

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