Imation to buy Memorex

Storage vendor, Imation has struck a US$330 million cash deal to acquire Memorex International, which markets CD and DVD products for the multimedia storage market.

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By  Colin Edwards Published  February 7, 2006

Imation, which manufacture magnetic tape and optical removable data storage media, has struck a US$330 million cash deal to acquire Memorex International, which markets CD and DVD products for the multimedia storage market. The deal also includes Imation paying between US$5 million to US$45 million over a three year period after the close of the deal to Memorex owners, depending on how the new business performs after the acquisition. Imation stockholders and Memorex, which is privately owned, have approved the acquisition and have agreed to integrate their businesses fully by the end of the year. "This acquisition is a major strategic milestone for Imation, as we implement our profitable growth strategy. It is also a win-win for both companies' customers and shareholders," said Bruce Henderson, Imation Chairman and CEO. "We are gaining a powerful consumer brand and global market share leader in recordable CDs and DVDs as well as an experienced management team under the leadership of Mike Golacinski. 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." Michael Golacinski, President and CEO of Memorex International, will head up Imation's consumer business, maintaining the Memorex headquarters in Cerritos, CA. A consumer electronics industry veteran, Golacinski was an executive with Maxell Corporation prior to joining Memorex in 1997. He stated: “Now with the focus and resources of a global data storage leader behind us, we can extend our reach into new regions - particularly in Europe - enhance and expand the product portfolio and grow both brands." Imation is known in the market more for its tapes and diskettes for storing computer data than for its consumer storage business in CDs and DVDs. The company hopes the Memorex acquisition will boost its presence in consumer media arena. The acquisition announcement was made alongside the release of Imation’s financial results for the fourth quarter and full year of 2005. Q4 2005 revenue of US$343.0 million was up 8.6% compared to $315.8 million for Q4 2004; full year revenue of US$1,258.1 million is up 7.2% compared to full year 2004 revenue of $1,173.7 million. Henderson said: “Imation’s results for the fourth quarter reflect our continuing revenue and earnings momentum as the Company performed well in all four quarters of 2005. Our data storage markets have been strongest in the Americas and Europe. We have launched several new products which should benefit us going forward, including our Ulysses removable backup hard drive, USB-enabled Micro Hard Drive, and ForceField Optical Media, with scratch-resistant coating for CDs and DVDs.” Once the companies are merged, the Memorex unit is expected to add US$32 million to US$36 million in yearly operating income.

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