Emphasising the ever-rising fortunes of optical discs and the rapid decline of tape, Imation is set to take over Memorex in an all-cash, board-agreed deal worth US$330 million, with additional conditional payments of between $5 million and $45 million over three years.

Imation is a successful major player in blank CDs and DVDs but is stronger on the business-to-business side than consumer. It reported revenues of $343 million (up 8.6 per cent) for Q4 2005 and year-on-year growth of 7.2 per cent.

That makes it a considerably bigger fish than Memorex, which reported 2005 revenue of $430 million, with roughly similar expected for 2006. But Imation doesn't having anything like the high-profile brand-awareness of Memorex and isn't as widely stocked in retail outlets. Significantly, too, Memorex isn't just known for tapes - recordable discs made up two-thirds of its 2005 revenue.

Commenting on the takeover, Bruce Henderson, Imation's chairman and CEO said it is a win-win for the companies, their customers and their shareholders. Explaining Imation's thinking, he added, "We are gaining a powerful consumer brand and global market share leader in recordable CDs and DVDs as well as an experienced management team. Added to our technology expertise, strong B2B brand, global footprint, broad product portfolio and industry experience, we are creating a new global powerhouse in the data storage industry."

Imation's press release is here; Memorex's is here.

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