"We are very disappointed that we are unable to complete this transaction," Adaptec chairman and chief executive Grant Saviers said in a statement. "While we are not in agreement with the FTC, we have concluded that it is in the best interests of both companies to terminate the transaction at this time."
Adaptec added that it would post a $20 million charge in connection with the transaction for the quarter ending June 30.
The episode is a reminder that antitrust laws can have a powerful effect on high-tech firms, even when they are relatively small in comparison to Intel and Microsoft, both of which are facing broad lawsuits alleging anticompetitive business practices.
Adaptec executives met yesterday with FTC commissioners to discuss the pending Symbios deal, and it became clear that the agency was not going to approve the merger, according to a person familiar with the matter. Another meeting had been scheduled for today, at which commissioners were expected to vote on whether to take legal action to block the merger.
Both Adaptec and Symbios make tools that connect peripheral devices to computers or workstations. Adaptec is a leading supplier of SCSI, or "scuzzy" adapter cards for Intel-based machines that run on Microsoft operating systems.
By contrast, Symbios, a division of Hyundai Electronics America, makes adapter "logic chips" that are embedded in motherboards, hard drives, and other devices manufactured by many of Adaptec's competitors.
According to a person familiar with the FTC inquiry, the agency was concerned that the merged company would control too much of the adapter market.
The companies announced their purchase agreement in mid February. Under the terms of the deal, Milpitas, California-based Adaptec was to pay cash for all the outstanding stock of Symbios, which is located in Fort Collins, Colorado. In mid April, the FTC indicated it had concerns about the deal by issuing requests for documents that went beyond the usual scrutiny federal regulators give to mergers.