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Ending a seesaw takeover battle, Cipher Data Products agreed Monday to be acquired by Costa Mesa-based Archive Corp. for $121 million in cash.
The merger of the two rival computer tape-drive makers will create a company with combined revenue of about $350 million, using annual, current sales figures. The new company will control roughly 45% of the fast-growing, quarter-inch-wide, cartridge tape-drive market, analysts said.
Under terms of the deal, Archive will pay $8.25 a share to acquire the approximately 95% of Cipher's stock it doesn't already own.
Archive Chairman D. Howard Lewis said in an interview Monday that there were "really good strategic reasons for combining Archive and Cipher. (Cipher) has good, strong technology," particularly in the growing, 3.5-inch cartridge tape-drive market. Tape drives are used by computer owners to back up hard and floppy disk drives.
But Archive was also motivated to acquire Cipher as a way of disposing of the patent infringement lawsuit filed by Cipher against Archive last year, analysts said. The suit alleges that Archive improperly used loading technology developed by Cipher for its cartridge tape drives. Cipher has said its legal action was strengthened when it won a similar suit against competitor Wangtek last spring.
The patent case, which was scheduled to go to trial in federal court in Santa Ana next October, now has been "rendered moot" by the merger agreement, Archive and Cipher officials said Monday.
Archive launched a hostile, $7.50-a-share tender offer for Cipher on Dec. 19. Cipher's board rejected the initial offer as "inadequate, excessively conditional and not in the best...