By James Wells
SYDNEY: TDK Australia staff were told at 4.00pm this afternoon that its parent company in Tokyo has reached an agreement to sell its recording media business to US-based Imation for $US300 million in stock and cash and receive representation on the Imation board.
TDK Australia managing director, Scott Brownscombe, advised retail customers via a letter sent after the close of business.
"We are confident that Imation’s commitment to the recording media business and development of new products in this category combined with TDK’s brand equity will translate into a stronger TDK brand," Brownscombe said.
"As you are aware TDK and Imation are global businesses and the impact of this decision on the Australian operations will be determined over the coming months and we will keep you informed," he said.
According to a statement released this evening, the agreement will see Imation acquire TDK’s worldwide recording media business and use of the TDK brand name for recording media products including magnetic tape, optical media, flash media and accessories for $US300 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.
The transaction which is expected to be completed in the third quarter of the calendar year, will see TDK become the largest shareholder of Imation with 17 per cent of shares worth $280 million. By agreement, TDK’s ownership stake will not exceed 22 per cent of Imation common stock on a fully diluted basis.
"TDK will continue R&D and manufacturing operations for recording media products including audio, video and data storage tape and Blu-ray optical discs," said a statement issued by both companies.
"TDK will supply Imation as well as other OEM (original equipment manufacturing) customers. The transaction includes a supply agreement providing uninterrupted and continuing supply of TDK brand products to the market," the statement said.
Imation president and CEO, Frank Russomanno, said the transaction expands on the company’s brand portfolio.
"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 said.
TDK president, Takehiro Kamigama, said the agreement offers both companies the opportunity to complement each others’ strengths in global regions, product and technology.
"The combination of the powerful TDK brnd 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," Kamigama said.
"In this era of ‘digital convergence’ – where communication technologies become more powerful and the iternet 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," he said.