Monday, May 08, 2006

Hit #95

Advanced Digital (ADIC) is being acquired by Quantum in a $770 million deal, valuing ADIC shares at $12.25/share, a premium of 53.7% over my average cost of $7.97/share.

ADIC shareholders can opt for cash or Quantum shares. I would go with cash, since I believe that Quantum will be available at a cheaper price later.

I had mentioned ADIC a few times on this blog, with the most recent one in this post on increased demand for bandwidth/storage to go with digital music/video downloads.

When Sun acquired StorageTek, I had also posted on what could have been better, more manageable targets for Sun, including ADIC. Having indulged in such a huge buyout, Sun may actually decide to sell StorageTek soon - that would be one of the most wasteful roundtrips ever!

I will likely recycle the cash back into the storage sector, with Overland (OVRL) on the top of the list. Note that ADIC had made a hostile bid on Overland last year, and after being rebuffed, withdrew its bid abruptly. The absence of a second bid should have been an indirect indicator that something else must be in the works for the potential acquirer. Another missed sign, though not as interesting as the one detailed here!

Previous hit - NetIQ (#94)


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