Imation has completed its previously announced acquisition of Memorex.
The all-cash deal, originally announced in January, was sealed with a total purchase price of $329 million, after net asset adjustments were made to the original price of $330 million. Additional cash consideration ranging between $5 million and $45 million will be paid out to Memorex shareholders over a period of up to three years, contingent on financial performance of the purchased business. Closing costs and advisory fees of approximately $5 million were also incurred.
Hanny Holdings, the Hong Kong-based investment group which purchased Memorex's consumer business from Tandy in 1993, held 67 percent of Memorex's shares along with Investor Asia Ltd., a private equity firm.
“This acquisition is a major strategic milestone for Imation, as we implement our profitable growth strategy,” said Bruce Henderson, Imation chairman/CEO. “We are adding a powerful consumer brand and the U.S. market share leader in recordable CDs and DVDs, as well as an experienced retail team. With Imation's deep technology expertise, strong business-to-business brand, global footprint, broad product portfolio and industry experience, we are creating a new global powerhouse in the data storage industry. Over the past three months, we have completed detailed integration planning and look forward to a rapid transition to the combined company.”
Memorex will become a division of Imation Corp. and the consumer products businesses in the Americas for both the Memorex and Imation brands will be headquartered in Cerritos, Calif. Ron Zinke, Imation VP, will assume the leadership role as VP, America's retail consumer division, reporting to Frank Russomanno, executive VP/COO of Imation.
Mike Golacinski, president/CEO of Memorex International, announced his decision to pursue interests outside of Imation and will provide consulting support during a transition period to aid in the integration of the two organizations.
“I could not be more proud of the accomplishments of the Memorex team I have had the honor of leading the past nine years,” said Golacinski in a statement. “I am confident that Imation is the right home for the Memorex company, brand and team. While I am looking forward to my new challenges, I want to thank my friends and colleagues at Memorex around the world and will continue to watch your success as part of Imation.”
In Memorex's fiscal 2005, ended March 31, the company reported revenue of $430 million and operating income of $30 million. In the subsequent two quarters, ending Sept. 30, 2005, Memorex's revenue totaled $205 million, and operating income totaled $14 million. After completion of integration, Imation expects Memorex to add approximately $32 million to $36 million in annualized operating income.