Quantum Completes Acquisition of Advanced Digital Information Corporation
August 22 2006 - 9:00PM
PR Newswire (US)
Creates Leading Global Storage Company Specializing in Backup,
Recovery and Archive Solutions SAN JOSE, Calif., Aug. 22
/PRNewswire-FirstCall/ -- Quantum Corp. (NYSE:DSS) today announced
the completion of its acquisition of Advanced Digital Information
Corp. (NASDAQ:ADIC), creating the leading global storage company
specializing in backup, recovery and archive solutions. With the
close of the acquisition, Quantum will provide customers of all
sizes with a comprehensive range of innovative products and
services designed to meet their current and future data protection
and retention needs. The combination is also expected to expand
Quantum's market access, increase its opportunities for growth and
strengthen its financial position. Under the terms of the
definitive agreement announced on May 2, 2006, and following
approval of the transaction by ADIC shareholders last Friday,
Quantum acquired all of ADIC and its outstanding shares for
approximately $770 million, primarily in cash. Quantum is funding
the transaction through a combination of cash on hand and
approximately $500 million in financing from a group of banks and
other lending institutions. The annual interest expense resulting
from the financing is expected to be approximately $50 million.
Quantum expects the transaction to be up to 15 cents accretive on
an earnings per share basis, with the accretion beginning to appear
in its financial results in the March quarter of next year. As a
result of intensive integration planning over the last few months,
the company has identified annualized cost synergies of
approximately $75 million to $80 million, compared to the $45
million it had initially estimated when it announced the definitive
agreement. Quantum expects to begin realizing the benefit of a
significant portion of these synergies by the end of this calendar
year, the majority of the synergy savings by the end of its fiscal
year (March 31, 2007), and the remaining synergy benefits in the
following two quarters after that. The synergies will reduce both
cost of goods sold and operating expenses and primarily be
generated by eliminating redundancies in internal programs,
processes and employee positions, rationalizing facilities,
leveraging higher manufacturing volumes to reduce supply chain
costs, and streamlining procurement processes. Coming Together to
Serve Customers Even Better "We are bringing together two
long-standing leaders in backup, recovery and archive to create the
largest independent company in this market, with more than 50 years
of experience in meeting customer needs," said Rick Belluzzo,
chairman and CEO of Quantum. "By combining our complementary
strengths and intelligently integrating our broad range of assets,
we are well positioned to provide even greater value to customers,
expand our branded channel and OEM base and pursue new
opportunities for growth. We will have more to say about this over
the next 30-45 days as we begin integrating the two companies." As
a global storage leader specializing in backup, recovery and
archive, Quantum has the focused expertise that customers need as
they struggle to meet the increasingly complex and continually
evolving challenges in this critical area of storage. With the
acquisition of ADIC, Quantum offers a comprehensive portfolio of
platform-independent systems, software, devices and media that
reflect a deep commitment to customer-driven innovation -- for
example, both companies have been pioneers in developing disk-based
virtual tape libraries for open systems environments and building
remote monitoring and intelligent diagnostic capabilities in tape
automation systems. In addition, with combined revenues exceeding
$1.2 billion over the last four quarters and a significantly larger
sales and service infrastructure, Quantum now has the scale to
engage with customers at a more strategic level. "The data
protection market is evolving rapidly, as IT professionals enhance
their tape-based data protection strategies with disk-based backup
and archive solutions and new software functionality," said John
McArthur, group vice president and general manager of IDC's
Information Infrastructure and Enabling Technologies Group.
"Quantum's acquisition of ADIC positions the company as a more
critical player in this expanding data protection market. The
combined company will have the scale and capability to offer not
only tape solutions but also a strong set of disk-based solutions,
an expanded software portfolio and a broader range of services."
Continuing to Focus on Customers and Partners during Integration In
preparation for the completion of the acquisition, Quantum and ADIC
teams have been working to ensure that the newly combined company
continues to meet the needs of existing customers and partners on
both sides during the integration of the two companies. As a
result, Quantum today announced that it will continue to: sell and
support all current Quantum and ADIC products; sell all products
through the companies' respective partners and distribution
channels; and maintain existing service contracts and product
warranties. Quantum has also moved quickly to finalize its Sales,
Marketing and Service organization, and all customer-facing
positions, roles and responsibilities will be finalized by next
week. With the completion of the acquisition, Quantum will have
nearly a thousand Sales, Marketing and Service employees providing
informed expertise, advice and support to customers around the
world. About Quantum Quantum Corp. is the leading global storage
company specializing in backup, recovery and archive. Combining
focused expertise, customer-driven innovation, and platform
independence, Quantum provides a comprehensive, integrated range of
disk, tape, and software solutions supported by a world- class
sales and service organization. As a long-standing and trusted
partner, the company works closely with a broad network of
resellers, OEMs and other suppliers to meet customers' evolving
data protection needs. Quantum Corp., 1650 Technology Drive, Suite
700, San Jose, CA 95110, (408) 944-4000, http://www.quantum.com/ .
NOTE: Quantum and the Quantum logo are trademarks of Quantum
Corporation registered in the United States and other countries.
"Safe Harbor" Statement under the U.S. Private Securities
Litigation Reform Act of 1995: This press release contains
"forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Specifically, without
limitation, statements relating to: (1) our expectations regarding
the benefits and capabilities resulting from our acquisition of
ADIC; (2) the annual interest expense resulting from the financing;
(3) our expectation that the ADIC transaction will be up to 15
cents accretive to Quantum on an earnings per share basis, with the
accretion beginning to appear in its financial results in the March
quarter of next year, (4) expected annualized cost synergies of
approximately $75 to $80 million, and the nature of and expected
timing for realizing these synergies; (5) our expectation that we
are well positioned to provide even greater value to customers,
expand our branded channel and OEM base and pursue new
opportunities for growth; (6) our intent to continue to: sell and
support all current Quantum and ADIC products; sell all products
through the companies' respective partners and distribution
channels; and maintain existing service contracts and product
warranties; and (7) our intent to finalize all customer- facing
positions, roles and responsibilities by next week, are
forward-looking statements within the meaning of the Safe Harbor.
These statements are based on management's current expectations and
are subject to certain risks and uncertainties. As a result, actual
results may differ materially from the forward-looking statements
contained herein. Factors that could cause actual results to differ
materially from those described herein include, but are not limited
to: (a) challenges in successfully integrating ADIC, its products
and its employees into Quantum and in achieving expected synergies;
(b) the failure to compete successfully in the highly competitive
and rapidly changing marketplace for backup, recovery, archive and
other storage products and services; (c) difficulties in retaining
ADIC's key employees; (d) our ability to successfully execute to
our product roadmaps and timely ship our products; (e) the risk
that lower volumes and continuing price and cost pressures could
lead to lower gross margin rate; (f) media royalties from media
manufacturers coming in at lower levels than expected; (g)
operational risks associated with the changes being made to our
manufacturing infrastructure; and (h) acceptance of, or demand for,
our products being lower than anticipated. More detailed
information about these risk factors, and additional risk factors,
are set forth in Quantum's periodic filings with the Securities and
Exchange Commission, including, but not limited to, those risks and
uncertainties listed in the section entitled "Risk Factors" on
pages 21 to 24 in Quantum's Form S-4 filed with the SEC on July 20,
2006 and those risks and uncertainties listed in the section
entitled "Risk Factors" on pages 14 to 25 in Quantum's Annual
Report on Form 10-K filed with the Securities and Exchange
Commission on June 12, 2006. In particular, you should review the
risk factors on pages 14 and 15 of our Form 10-K under the headings
"From time to time we make acquisitions, such as the contemplated
acquisition of ADIC. The failure to successfully integrate recent
or future acquisitions could harm our business, financial
condition, and operating results" and "If we draw on our
contemplated $500 million credit facility with Key Bank, we will
substantially increase our debt, which could adversely affect our
cash flow and prevent us from fulfilling our obligations." Quantum
expressly disclaims any obligation to update or alter its
forward-looking statements, whether as a result of new information,
future events or otherwise. DATASOURCE: Quantum Corp. CONTACT: Brad
Cohen, Public Relations, +1-408-944-4044, or , or Mary Springer,
Investor Relations, +1-408-944-4450, or , both of Quantum Corp. Web
site: http://www.quantum.com/
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