Adaptec Abandons Symbios Merger After Ftc Pressure

Computergram International, June 26, 1998

Adaptec Inc, the Milpitas, California-based seller of bandwidth management technology has been forced to abandon its $775m cash offer for Symbios Inc, a wholly-owned unit of Hyundai Electronics America, following hints that the US Federal Trade Commission (FTC) was planning to block the deal. In a press release issued on Thursday, Adaptec said the companies had mutually terminated the agreement, based on beliefs that the FTC "was unlikely to approve the transaction in its current form." Originally announced in February, the plan was to merge "Two strong companies, focused on different areas of bandwidth management," said Grant Saviers, CEO of Adaptec.

Saviers wanted to merge his companies expertise in adapter cards for PCs with Symbios Inc's similar products in the higher-end Unix arena. And Korean firm Hyundai was trying to restructure its assets in the wake of the turmoil caused by Asia's economic problems, for which $775m in cash would have been very handy. But the FTC has apparently said no on the basis that the combined firms would command too much power in the adapter market. The set back will cost Adaptec $20m in previously committed expenditure, the company said. The charge will hit in the current quarter ending June 30, alongside an $8m- $12m restructuring charge recently announced to cover 250 redundancies following a downturn in Adaptec's business.