Japan's Softbank Corporation has acquired a controlling stake in Kingston Technology, a US computer memory retailer, the Japanese company announced today. The purchase of the world's leading supplier of PC memory modules is the latest in a long line of American computer industry companies initiated by Softbank.

Under the terms of the deal, Softbank has an 80% in a new joint venture company formed with Kingston's co-founders, John Tu and David Sun, who hold the remaining 20%. The new company will assume all the business of Kingston Technology.

Softbank said it was paying Tu and Sun $1.5 billion plus earnings-related performance payments for 1996 and 1997. The payment will take the form of $425 million of newly-issued shares of Softbank and cash. The shares will make the two men together, owners of around 5% of Softbank.

Citing a figure that puts computer memory at around 20% of the price of a new personal computer, the purchase was described by Softbank as, "a strategic and highly complementary addition to Softbank's growing network of companies that provide key infrastructure services to the PC market of the future."

"Softbank is committed to providing essential infrastructure services through a network of key 'building block' companies that provide the growth tools needed by the evolving digital information industry," said Masayoshi Son, president and chief executive officer of Softbank.

Sometimes called Japan's Bill Gates, Son continued, "Memory is essential to achieving software and hardware productivity and performance. With the ever-expanding memory needs of today's PCs, workstations, and other digital appliances, the memory market opportunity is enormous. Kingston's leadership position, combined with its grasp of logistics management, marketing, and design, allows it to fill a critical market need."

Kingston Technology is nine years old and is predicting revenues of $1.5 billion this year on annual growth rates of around 92%. The deal with Softbank is the first outside financing of any type since its inception.

As a member of the Softbank group of companies, Kingston will continue in much the same way as now, said the Japanese company. Tu and Sun will continue in their positions as will the rest of the company staff. It will operate as an autonomous member of the Softbank group.

Two years ago Softbank was nothing more than Japan's top publisher and distributor of computer magazines, not that this wasn't anything in itself. Now, with a continuing aggressive policy of company acquisitions, the company is the world's largest publisher of computer-related magazines and books, and is the world's largest producer of technology-related trade shows and expositions. It is also Japan's largest software, peripherals, and systems distributor.

Group companies include: Ziff-Davis Publishing; Phoenix Publishing Systems; Softbank Exposition & Conference Co; Softbank Comdex and Softbank Services (previously known as UCA&L;). The company also has a variety of stakes in Internet infrastructure companies, including: Agents; CyberCash; I/Pro; OnLive! Technologies; USWeb; and Yahoo!

 

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