Seagate acquires Maxtor

Following on from reports earlier this morning, Seagate and Maxtor have issued a joint press release confirming that Seagate will be acquiring Maxtor.

The all stock transaction will see Seagate acquire all of Maxtor, with Maxtor shareholders receiving .37 shares in Seagate for every Maxtor share they own. The $1.9bn transaction has been approved unanimously by the boards of both companies.

The two companies will continue to operate as individual entities until some time in the second half of 2006. Once the deal comes to a close the two companies will become a combined company. Seagate's CEO, Bill Watkins, said the following in today's press release:

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. With the increased scale of the combined company, we can reduce overall product costs and provide more innovative products at more competitive prices. We believe this is a strategic combination that will provide value for our shareholders as well as benefits for our customers.

Seagate has proved to be consistently spoken highly of. While performance of its desktop disk drive products do not tend to be class leading, a 5 year warranty on their drives (not just enterprise products) assures customers of reliability. Opinions of Maxtor tend to be more mixed, with some relying exclusively on their disk products, citing a good RMA service as one reason, while others question the failure rate of the drives. Ultimately, if Seagate can take on-board some of the differences between the two companies and use them to its advantage, then this acquisition will be more of a benefit to consumers and the industry, rather than just a case of one company gobbling up a competitor.