Imation and TDK Agree to Imation's Acquisition of TDK Brand Recording Media Business for $300 Million in Stock and Cash
19 Aprile 2007 - 9:10AM
PR Newswire (US)
TDK to Take Approximately 17% Ownership Stake in Imation Seat on
Imation Board of Directors TOKYO and OAKDALE, Minn., April 19
/PRNewswire-FirstCall/ -- Imation Corp. (NYSE:IMN) and TDK
(NYSE:TDK) announced today that they have reached a definitive
agreement under which Imation will acquire TDK brand world wide
recording media business and use of the TDK brand name for
recording media products, for $300 million in a combination of
Imation common stock and cash with potential for payment of up to
an additional $70 million based on future financial performance of
the acquired business. TDK will retain its R&D, manufacturing
and OEM business. The boards of directors of both companies have
approved the transaction. Highlights of the proposed transaction
include the following: -- Imation will acquire TDK brand recording
media business and use of TDK brand name for current and future
recording media products including magnetic tape, optical media,
flash media and accessories. -- At closing, TDK will receive
approximately $280 million in Imation common stock, representing
approximately 17 percent of shares outstanding, and $20 million in
cash subject to certain conditions. This transaction will make TDK
the largest shareholder of Imation and TDK will have the right to
nominate a representative to serve on the Imation Board of
Directors. By agreement, TDK's ownership stake will not exceed 22
percent of Imation common stock on a fully diluted basis. -- TDK
brand recording media business operates globally, with major
operations in Europe, Japan, the United States, and Asia. A number
of TDK brand recording media employees are expected to transfer to
Imation upon close. The transaction is expected to close in the
third calendar quarter of 2007, subject to customary closing
conditions. -- TDK will continue R&D and manufacturing
operations for recording media products including audio, video and
data storage tape, and Blu-ray optical discs. TDK will supply
Imation as well as its other OEM customers. -- The transaction
includes a Supply Agreement providing uninterrupted and continuing
supply of TDK brand products to the market. Frank Russomanno,
Imation President and CEO said: "With this transaction Imation
expands our portfolio of brands and builds on our four pillars of
storage. Imation is bringing the well known TDK brand into our
growing portfolio of strong consumer brands as well as adding the
highly respected TDK brand recording media products to our
commercial and consumer product portfolio." "We continue to build
on our solid legacy, our global footprint, broad product portfolio,
deep technology capability and global distribution, where we have
operational and strategic synergies. Imation and TDK have
established the foundation for a long-term strategic relationship
that potentially allows the two companies to collaborate in other
areas of mutual interest and benefit," Russomanno concluded.
Takehiro Kamigama, TDK President said: "Powerful brands are
important as consumers trust their critical information to these
products. TDK and Imation can develop an ideal cooperation by
complementing each others strengths in terms of regions, product
and technology. The combination of the powerful TDK brand and the
global brand and product management capabilities of Imation is the
right strategy to take full advantage of these trends, compete
effectively, meet evolving market demand and profitably grow the
business." "In this era of 'digital convergence'-- where
communication technologies become more powerful and the Internet is
ubiquitous -- recordable media products which meet the demand for
capacity, convenience and mobility must anticipate the emerging
needs of consumers to enable them to 'live the digital lifestyle.'
This transaction positions the TDK brand to continue to meet
consumers' needs into the future," Kamigama concluded. Additional
Information and Where to Find It Additional information about
Imation and this transaction is available at
http://www.imation.com/. Additional information about TDK is
available at http://www.tdk.co.jp/tetop01/index.htm. About Imation
Corp. Imation Corp. is the only company in the world solely focused
on the development, manufacture and supply of removable data
storage products spanning the four pillars of magnetic, optical,
flash and removable hard disk storage. With more than 50 years of
data storage leadership beginning with the development of the
world's first computer tape, Imation proudly marked its tenth
anniversary as an independent company during 2006. In addition to
the Imation brand, Imation Corp.'s global brand portfolio includes
the Memorex brand, one of the most widely recognized names in the
consumer electronics industry, famous for the slogan, "Is it live
or is it Memorex?" Additional information about Imation is
available at http://www.imation.com/ or by calling 1-888-466-3456.
Imation, the Imation logo, Memorex, and "Is it live or is it
Memorex?" are trademarks of Imation Corp. and its subsidiaries. All
other trademarks are the property of their respective owners. About
TDK Corporation TDK Corporation (NYSE:TDK) is a leading global
electronics company based in Japan. It was established in 1935 to
commercialize "ferrite," a key material in electronics and
magnetics. TDK's current product line includes ferrite materials,
electronic components, wireless computer networking products,
magnetic heads for HDD, and advanced digital recording media. Net
sales in FY March 2006 were ca. US $6.8 billion. For more
information about TDK, please visit
http://www.tdk.co.jp/tetop01/index.htm. Imation Press Release
Supplemental Information Imation Corp. (NYSE:IMN) has issued two
news releases this morning (Imation Announces Q1 2007 Financial
Results: Imation and TDK Agree to Imation's Acquisition of TDK
Brand Recording Media Business for $300 Million in Stock and Cash).
The company has scheduled a teleconference for the financial
community and news media to discuss these announcements. The
teleconference is scheduled to begin at 9:00 AM Central Daylight
Time, today. A live webcast of the teleconference will be available
at http://www.imation.com/ and http://www.streetevents.com/. The
Teleconference Dial-in Number is: 866-256-9239 (U.S.) Telephonic
replay will be available from 1:00 PM CDT on April 19, 2007 until
5:00 PM CDT Tuesday, April 24, 2007. The Replay Number is:
866-837-8032 (U.S. only) Access #1054649. All remarks made during
the teleconference will be current at the time of the call and the
replay will not be updated to reflect any subsequent developments.
Summary of TDK Transaction, Financial and Operational Information
TDK Financial and Operational Information: Imation is purchasing a
combination of assets and stock of TDK's Recording Media business,
excluding R&D and Manufacturing assets. For the 12 month period
ended December 2006, Imation estimates that TDK generated
approximately $670 million in revenue associated with the business
being sold to Imation. Looking forward, Imation expects to report
$575 million to $600 million in revenue, post integration
associated with the business being acquired due to the elimination
of certain revenues associated with the TDK brand which are already
captured by Imation. Under terms of the agreement, Imation has a
long-term right to use of the TDK brand for current and future
recordable magnetic, optical and flash media products globally.
That right is revocable by TDK after 25 years, with a one year wind
down. The transaction includes a Supply Agreement for TDK branded
magnetic tape products, to include data storage, audio and video
tape cartridges. The transaction agreement includes customary
representation, warranties as well as a purchase price adjustment
mechanism based on the level of working capital delivered at
closing. Imation anticipates that the acquisition, once fully
integrated, will add approximately $25 million to $30 million in
annualized operating income. This estimate includes purchase price
amortization expenses of approximately $13 million, as well as
significant synergy benefits, including expense reductions,
purchasing, and supply chain benefits. Relative to fully diluted
E.P.S. once fully integrated and, on the same basis described
above, Imation estimates the acquisition to be slightly accretive
to our current business. This estimate includes per share dilution
from the issuance of shares to TDK prior to any share repurchase
activity and the assumed loss of interest income due to cash used
in the acquisition. Separately today, Imation announced that its
Board of Directors has increased outstanding authorization for
share repurchase. See Imation Board Authorizes Repurchase of up to
5 Million Shares of Common Stock; PR Newswire, April 19, 2007.
Purchase price: The $300 million purchase price is made up of
approximately $280 million in Imation stock and $20 million in
cash. Seven million shares are expected to be issued from treasury
valued at $40.47 per share representing approximately 17 percent
ownership. The purchase price is subject to adjustment or
renegotiation should the average trading price of Imation common
stock prior to closing be greater than $45.73 or less than $35.21
per share. Up to an additional $70 million in additional
consideration could be paid out over three years contingent upon
financial performance of the business. Next Steps: Anti-trust
regulatory review filings are expected to be filed in the U.S. and
certain countries in Europe with closing expected during the 3rd
calendar quarter of 2007. Risk and Uncertainties Certain
information contained in this press release which does not relate
to historical financial information including the expected
financial impact of the acquisition of the TDK recording media
business may be deemed to constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and
uncertainties that could cause our actual results in the future to
differ materially from our historical results and those presently
anticipated or projected. We wish to caution investors not to place
undue reliance on any such forward-looking statements. Any
forward-looking statements speak only as of the date on which such
statements are made, and we undertake no obligation to update such
statements to reflect events or circumstances arising after such
date. Risk factors include our ability to successfully close the
acquisition of the TDK recording media business and achieve the
anticipated benefits including synergies in a timely manner; our
ability to operate the Memorex product lines as an integrated
entity; our ability to successfully defend our intellectual
property, including the Memorex brand and patent licenses and the
Philips patent cross license; continuing uncertainty in global
economic conditions that make it particularly difficult to predict
product demand; our ability to meet our cost reduction and revenue
growth targets; our ability to introduce new offerings in a timely
manner either independently or in association with OEMs or other
third parties; our ability to achieve the expected benefits from
the Moser Baer and other strategic relationships and distribution
agreements such as the GDM joint venture and Tandberg
relationships; the competitive pricing environment and its possible
impact on inventory valuations; foreign currency fluctuations; the
outcome of any pending or future litigation; our ability to secure
adequate supply of certain high demand products; the ready
availability and price of energy; availability of key raw materials
or critical components; the market acceptance of newly introduced
product and service offerings; the rate of decline for certain
existing products, as well as various factors set forth from time
to time in our filings with the Securities and Exchange Commission.
DATASOURCE: Imation Corp. CONTACT: Brad Allen, Investor Relations
and Corporate Communications of Imation Corp., +1-651-704-5818, ;
or Nobuyuki Koike, Corporate Communications Dept. of TDK
Corporation, +81-3-5201-7102, Web site: http://www.imation.com/
http://www.tdk.co.jp/tetop01/index.htm
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