History (1993): Korea’s Hyundai to Acquire 40% of Maxtor

Maxtor Corp. (San Jose, CA) has signed a letter of intent for creation of a partnership with Hyundai Electronics Industries Co., Ltd. (Seoul, Korea), part of the Hyundai Business Group.

Upon completion of the transaction, Hyundai will invest $150 million in Maxtor and receive approximately 19.4 million shares of Maxtor’s common stock, representing approximately 40% of its outstanding stock at a $7.70 per share price.

According to a European representative of Maxtor, it is the most important investment of a Korean company in a foreign firm. The Korean company will get the chairman’s position and up to 3 seats in the board of directors.

The non-binding letter of intent also provides that Hyundai may not acquire more than 45% of Maxtor, except in a tender offer for all outstanding shares or “in certain other cases.“

The transaction is anticipated to close in November.

It’s a breath of fresh air for the financially-troubled company.

“As these turbulent times for the disk drive industry illustrate, financial strength is the key to bringing new and better technology to market. This investment will provide us with a firm financial base and allow us to strengthen our focus on developing and selling new products,” said Maxtor’s president and CEO Larry Hootnick.

Dr. C. S. Park, SVP of Hyundai Electronics added: “We believe an investment in Maxtor is a major strategic step in developing our global technological capabilities and we look forward to a long and fruitful relationship.”

Until now, Hyundai was hardly not involved in the data storage industry, only to manufacture floppy disk drives with Fujitsu’s support and the recent development of a 3.5-inch M-O drive, via a 55% ownership in start-up LaserByte (Sunnyvale, CA).

It didn’t manufacture HDDs but now will be able to buy them, at a good price, from its new partner and integrate them in its own PCs.

This merging is also going to create an optical core with, on one side. Maxoptix, a subsidiary of Maxtor and Kubota, specialized in 5.25-inch drives, and LaserByte, on the other side, in the 3.5-inch form factor.

This article is an abstract of news published on the former paper version of Computer Data Storage Newsletter on issue 68, published on September 1993.