Data storage vendor, Imation, announced a $US330 million cash deal to acquire Memorex International, a well-known provider of consumer CD and DVD products for multimedia storage.
Imation also will pay between $5 million to $45 million over a period of three years after the close to Memorex owners, depending on how the new business performs after the acquisition, according to Imation.
Both Imation stockholders and Memorex, which is privately held, have approved the acquisition. The companies expect to integrate their businesses fully by the end of the year.
President and chief executive officer of Memorex, Michael Golacinski, will lead Imation's consumer business, continuing operations at the Memorex headquarters in California.
Imation planned to retain the Memorex brand once the acquisition was complete, Imation spokesperson, Mary Rawlings-Taylor, said.
Memorex has strong brand recognition among consumers for providing recordable CDs and DVDs, and previously was a major provider of cassette tapes when that storage format was popular.
In fact, the power of the Memorex brand was what made the deal especially attractive to Imation, she said.
Imation is known mainly for providing tapes and diskettes for storing computer data, but it also has a consumer storage business in CDs and DVDs. The company hoped the Memorex acquisition would boost its presence in that area, Rawlings-Taylor said.
In Memorex's fiscal 2005, ended March 31, 2005, the company reported revenue of $US430 million and operating income of $US30 million. In the subsequent two quarters, ending September 30, 2005, Memorex's revenue was $US205 million and operating income was $US14 million.
After the companies are merged, Imation expects its Memorex unit to add $US32 million to $US36 million in yearly operating income.