Seagate Engulfs Maxtor

Shares of Seagate closed Wednesday's regular session up 63 cents, or 3.2%, to $20.23. They were recently up 2 cents after hours. Maxtor shares gained $2.41, or 53%, to close at $6.93, and then recently lost 13 cents after hours.

Seagate shareholders will end up with 84% of the combined company. The acquirer expects the deal to be 10% to 20% accretive on a cash earnings basis after one year despite "revenue attrition."

Deutsche Bank analyst Chris Whitmore, whose firm does not have an investment banking relationship with Seagate, said the company could earn a return of approximately roughly 8% on the acquisition, based on cost-cutting that could raise gross margins to about 35%.

Seagate said the deal will add 10% or 20% to its profit after the first full year of joint operations.

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