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SyQuest looks for ally

Hard drive maker SyQuest, which has been losing market share, plans to acquire a French hard drive and cartridge manufacturer.

Hard drive maker SyQuest Technology (SYQT), which has suffered losing market share, said today that it plans to acquire a French hard drive and cartridge manufacturer.

Under the proposed deal, SyQuest will acquire a 66 percent stake, or 674,735 shares, in Nomai from two investors. The stock transaction, valued at nearly $20.6 million, is expected to be completed in early 1997.

Once regulatory approval from the French and U.S. governments is granted, SyQuest will seek the remaining shares of Nomai.

"This acquisition not only adds depth to our strong product portfolio but increases our share of the growing worldwide market. It is another important step in the restoration of SyQuest as a global competitor," Chairman Ed Marinaro said in a statement.

SyQuest also today announced that it received an $8.5 million infusion of capital from investment firm Fletcher International. In exchange, Fletcher received five-year warrants to purchase up to 1.87 million shares of common stock at a discount.

The company since the summer has received $70 million in equity investments. This latest investment allows SyQuest to move forward in rebuilding its balance sheet, Marinaro said.

SyQuest posted a loss of $41.3 million during the third quarter ended June 30, compared with net profits of $1.7 million a year ago. Revenues, meanwhile, plummeted by more than 50 percent to $29.5 million for the third quarter, compared with $68.8 million a year ago.