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KOMAG SIGNS DEFINITIVE AGREEMENT TO ACQUIRE DASTEK, CONDUCTS NEGOTIATIONS TO ESTABLISH JV WITH ASAHI

         KOMAG SIGNS DEFINITIVE AGREEMENT TO ACQUIRE DASTEK,
           CONDUCTS NEGOTIATIONS TO ESTABLISH JV WITH ASAHI
    MILPITAS, Calif., Nov. 1 /PRNewswire/ -- In a move to enhance its long-term growth, Komag Inc. (NASDAQ: KMAG), the leading non-captive supplier of sputtered thin-film disks for high-performance Winchester disk drives, today announced plans to accelerate its entry into the thin-film head business.
    Komag signed a definitive agreement to acquire Dastek Inc., a privately held manufacturer of thin-film recording heads, for approximately 3 million shares of Komag common stock in a pooling-of- interests transaction.  "The number of shares involved in the potential acquisition is not dependent on Komag's stock price," disclosed Stephen C. Johnson, Komag's president and chief executive officer.  The transaction is expected to be completed before the end of the year.
    "Komag is also conducting negotiations with Asahi Glass Co. Ltd., one of its key strategic partners, to establish a joint venture into which Komag's existing thin-film head development program and the pending acquisition would be combined.  Asahi Glass would contribute technical expertise to and make a significant cash investment in the joint venture for an unspecified minority interest," revealed Johnson. There can be no assurances that the discussions with Asahi Glass will result in the formation of a joint venture.  Komag currently manufactures and sells media products through a joint venture, Asahi Komag Co. Ltd. in Japan with Asahi Glass.
    "Acquisition of Dastek's proven product line, installed production capacity and market position should enable Komag to accelerate significantly its commercial product entry into the rapidly growing thin-film head market.  We believe that Dastek's operations and technology, in combination with the advanced thin-film head technology acquired from Siemens AG in 1990, provide Komag with an exciting opportunity to make significant contributions to the thin-film head marketplace," commented Johnson.  "Komag's financial resources and reputation as a technically advanced and reliable component supplier should enable us to expand our customer base and increase our market share," stated Jeffery Bastow, Dastek's chairman.
    "Upon completion of the transaction, Komag anticipates that it will record various one-time charges including acquisition costs of approximately $2 million and other adjustments to conform Dastek's financial statement policies to those of Komag," revealed Johnson. These charges will negatively impact the company's fourth quarter results if the acquisition is completed before the end of 1991 as planned.  In addition, Dastek's operations are expected to have a dilutive effect on Komag's consolidated 1992 earnings per share.
    "Komag continues to see strong demand for high-performance disk products.  After a full year without the addition of any new U.S. production lines, we are planning to increase our capacity to meet an anticipated increase in media unit demand," commented Johnson.  "Komag plans to install in its San Jose, Calif., facility a 10th sputtering line late in the first quarter of 1992 and an 11th line during the second half of 1992.  The 11th sputtering line will be dedicated to new media product and process development efforts as well as commercial production.  In addition, we are currently evaluating various manufacturing sites for post-1992 media expansion.  The establishment of a new factory in 1993 will result in certain expenses for site selection and preparation, employee recruitment and training in 1992," noted Johnson.  As a result of these expansion expenses and continuing price pressures in the storage industry, the company expects that year-to-year growth in income derived from its existing media operations will slow in 1992.
    The products from Komag and Dastek primarily address the fast growing high-capacity, high-performance segment of the disk drive market.  Komag is the leading non-captive supplier of media to this market segment and manufactures the highest density disks commercially available for the 5 1/4-, 3 1/2- and 2 1/2-inch form factors.  Dastek is one of the three largest thin-film head suppliers to the merchant market.  "Both companies provide key enabling technologies that allow increased data storage densities in Winchester disk drives," Johnson indicated.  Winchester disk drives are widely used in a broad range of computer applications from mainframes to portable computers.
    Based in San Jose, Calif., Dastek was incorporated in 1986 and began commercial shipments of thin-film heads the following year. Dastek maintains 105,000 square feet of manufacturing and administrative space in California and Malaysia.  Dastek employs approximately 800 employees.
    Founded in 1983, Komag maintains 400,000 square feet of manufacturing and administrative space in California.  The company also manufactures and sells products through a joint venture, Asahi Komag Co. Ltd., which is among the top three media producers in Japan. The company maintains a technical support facility in Singapore. Komag employs approximately 1,700 people.  The company is traded on the NASDAQ over-the-counter market under the symbol KMAG.
    -0-                11/1/91
    /CONTACT:  David H. Allen or William L. Potts Jr. of Komag, 408-946-2300; or John Trifari of John Trifari Public Relations, 415-349-9812, for Komag/
    (KMAG) CO:  Komag Inc.; Dastek Inc. ST:  California IN:  CPR SU:  TNM CH -- NYON1 -- 0030 11/01/91 03:48 EST
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Publication:PR Newswire
Date:Nov 1, 1991
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