The two founders of memory manufacturer Kingston Technology are buying back an 80 per cent stake in the company from Softbank, three years after it was originally sold.
John Tu and David Sun, co-founders and joint presidents, will repurchase the majority stake in the privately owned firm for about $450m, representing a heavy loss for Softbank which paid $1.5bn in cash and stocks in 1996 (PC Dealer, 21 August 1996).
Softbank claimed it could have received a better price elsewhere for the struggling memory vendor but a gentleman's agreement had been made not to sell the stake on to different owners.
Kingston has suffered from the continuing fall in DRam prices, posting a $50.6m loss for the year ended 31 March. With the repurchase of the shares, Kingston aims to focus on the core of its business once again.
Alison Heath, UK sales and marketing director at Kingston, said: "When you have to answer to shareholders, there is always more pressure to justify your actions, to get a return for the investors. Now the company is back in the hands of John and David, there will be more focus on the company's culture - they can invest where they want."
It is believed that there will not be any redundancies resulting from the repurchase, with the founders claiming that the deal was done on their employees' behalf. Kingston maintained that there are no plans to float the company or bring in another partner like Softbank.
Softbank will write off $600m related to the investment in loss-making Kingston, and now intends to concentrate entirely on internet related investment.
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