Seagate Technology Inc yesterday made its bid to become substantially the world’s biggest stand-alone disk drive manufacturer by acquiring the gran’daddy of the business, Control Data Corp’s Imprimis Technology Inc for about $450m in cash and paper. The Scotts Valley, California company has signed a letter of intent to pay CDC $250m cash – good for a $1 jump in Control Data’s share price to $21.25, 10.7m new Seagate shares, and a $50m promissory note, to be financed by the proceeds of a new $300m credit agreement. Definitive agreement is expected in a few weeks and Seagate would continue to provide to Control Data with disk drives for use with the Data Cyber line of mainframes, and for militarised use by its Government Systems Division. Annual sales at Seagate are running at some $1,250 it made a net loss of $24m on sales of $1,001m for the nine months to March, while Imprimis sales are running at around $900m, so the combined company will have annual sales of well over $2,000m, and take Seagate back into bigger diameter disk drives. Imprimis now accounts for over a third of Control Data’s total business, and after the sale, the company will shrink to a mainframe builder and a computer services operator – and the Cyber mainframe business is not likely to attract a buyer as a going concern.
