Global supplier of removable data storage media Imation has entered into an agreement to acquire Memorex International in a $330 million all-cash transaction.
As part of the deal, Imation will pay an additional cash consideration of between $5 million and $45 million, over a period of up to three years after the close of the transaction, depending on financial performance of the purchased company.
Memorex is a US-based producer of consumer electronics, including in CD and DVD media, optical drives, flash drives and media accessories.
Imation says in a statement that it has adequate cash on hand - $507.6 million at 31 December 2005 - to fully fund the deal and meet current operating costs. The group is in the process of establishing a new and expanded credit facility of $200 million to $250 million, which it expects to be in place by the close of the acquisition.
"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," says Bruce Henderson, Imation chairman and CEO.
"We are gaining a powerful consumer brand and global market share in recordable CDs and DVDs, as well as an experienced management team under the leadership of Mike Golacinski."
Golacinski, president and CEO of Memorex International, will head up Imation`s consumer business, maintaining the Memorex headquarters in Cerritos, California.
"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," he says.
In fiscal 2005, Memorex reported revenue of $430 million and operating income of $30 million. In the subsequent two quarters, ending 30 September 2005, Memorex`s revenue totalled $205 million and operating income totalled $14 million.
After the completion of integration, Imation expects Memorex to be significantly accretive, adding $32 million to $36 million in annualised operating income and $0.40 to $0.47 earnings per share.
The full integration of Memorex into Imation is expected to be completed by the end of this year.
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