Seagate Acquires Disk-Drive Rival Maxtor

Leading disk-drive maker Seagate is acquiring long-troubled rival Maxtor in an all-stock transaction valued at $1.9 billion.

That Maxtor is being acquired is hardly a surprise; the company has had financial troubles for years, and has been rocked by other significant problems for well more than a year. Maxtor's turmoil hit a pinnacle last year when it invested hugely in a new manufacturing plant in China at a time when disk-drive volumes were dropping.

Maxtor was also hit last year with faulty drives it had shipped to OEM partner Dell; went through three CFOs, one of whom only lasted two months; and ousted CEO Paul Tufano, bringing back C.S. Park as chairman and CEO.

Since Park's return, there has been speculation that Maxtor was on the block, though the company's performance has improved as it aggressively refreshed its product lines. The combined company will be called Seagate, whose management team will remain intact. Park will become a Seagate director.

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Seagate and Maxtor tied in the enterprise disk drive category of VARBusiness' 2005 Annual Report Card, though Seagate came in first for product innovation, while Maxtor came in first for support and partnership.