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Softbank buys into memory

Softbank, in another ambitious acquisition, buys an 80 percent stake of the leading supplier for PC memory.

Softbank will pay $1.5 billion in cash and stock to buy 80 percent of Kingston Technology, a leading supplier of memory for personal computers, the companies announced today.

Kingston's cofounders, Taiwan-born John Tu and David Sun, will retain 20 percent ownership and continue to run the Southern California-based firm. Softbank will pay more than $1 billion in cash plus $425 million in new Softbank shares.

For Kingston, the deal will open up distribution channels in Japan, where Softbank is the largest distributor of software. The original talks between Softbank and Kingston focused on a Japanese joint venture, said Ron Fisher, Softbank's U.S.-based vice chairman.

"Softbank is committed to buying essental infrastructure services with key building blocks throughout the world," said Fisher, Softbank's vice chairman. "We define the infrastructure very broadly."

The investment in nine-year-old Kingston, which expects to book more than $1.5 billion in revenue this year, will roughly double Softbank's annual revenue, which was about $1.5 billion for the fiscal year ended in March. Technology mergers specialist Broadview Associates initiated the deal.

It also reflects Softbank's aggressive strategy of investing in companies that provide infrastructure for the personal computer and Internet markets. Memory is the fastest-growing segment of the semiconductor market.

Masayoshi Son, Softbank president and CEO, is pursuing that strategy with checkbook wide open. Based in Japan, where its stock is traded, Softbank already owns Ziff-Davis Publishing, Softbank Exposition & Conference Company, the giant Comdex trade show, and others firms.

Son also has invested in a host of Internet start-ups, including CyberCash, USWeb, and Yahoo.

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