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Veritas to Buy Seagate's Network Software Unit

Computers: The stock deal, valued at $1.6 billion, will add to company's range of storage and management products.

October 06, 1998|From Bloomberg News

Veritas Software Corp. said Monday that it will buy a network management software unit from Seagate Technology Inc. for $1.6 billion in stock to expand in the storage management software market.

Veritas said it will issue 33 million shares for Seagate Software Network Storage and Management Group and that the deal will create a combined company of 2,300 employees.

The transaction is subject to shareholder approval and is expected to be completed by January.

"The merger of Seagate Software NSMG and Veritas will form a company with an unprecedented range of products and immediate market leadership," Veritas Chief Executive Mark Leslie said.

Leslie will hold the office of chairman and chief executive of the combined company, which will retain the Veritas name. Terry Cunningham, current chief executive of Seagate Software Inc., will be president of the company.

Mountain View-based Veritas makes software to guard against the loss of data after computer crashes and to speed recovery after failures.

The announcement came after the close of U.S. trading. Veritas shares fell $2.88 to $45.38 before trading was halted on Nasdaq. Seagate Technology shares fell $1.44 to close at $23 on the New York Stock Exchange.

Last month, Scotts Valley-based Seagate said it may sell an unused $70-million plant in the Philippines amid falling demand for its storage devices. The plant was built last year and would have employed 1,100 workers.

In January, it fired 1,800 workers, or 10% of its work force.

Seagate and other PC disk drive makers are facing a global slump in demand for their products, which have been bruised by price-cutting and weak sales of personal computers.

In August, the company said co-founder Alan Shugart resigned from the board of directors, two weeks after the board fired the 67-year-old as chairman and chief executive in a bid to revive the struggling company.

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