Article

Acquisition fever

Kevin Komiega

It's open season on storage companies.

Market conditions are ripening for acquisitions, and many storage vendors are on the hunt for acquisition opportunities.

This week saw three vendors gobble up smaller companies to gain new technology, facilities and customers.

Software specialist Legato Systems Inc., Mountain View, Calif., shelled out $12.5 million in an all-cash buyout of privately-held SCH Technologies, a Cincinnati, Ohio-based software and services organization.

As part of the deal, Legato gained a laundry list of technical development centers and sales and service offices across the United States, Europe, Australia and the Pacific Rim, along with media life cycle management and tape device and library sharing technology from SCH.

Also on the hunt this week was Disc Inc., Milpitas, Calif.-based manufacturer of automated storage systems, which bagged CD and DVD library maker NSM Storage GmbH.

Disc will acquire all outstanding shares of NSM in exchange for up to 1.2 million shares of Disc common stock. NSM will become a wholly- owned subsidiary of Disc and will continue to serve its existing markets from its home base in Bingen, Germany.

According to Disc, the merger will give their combined customers on both sides of the Atlantic a line of NearLine storage products encompassing both the DVD-RAM and Magneto-Optical storage technologies.

Historically, NSM has focused on the CD and DVD library market, while

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Disc has lived in the larger capacity, high-end Magneto-Optical market.

Rounding out the hat trick of storage buys was Oak Technology Inc.'s, purchase of Osaka, Japan-headquartered Accel Technology Ltd., a design engineering firm focused on CD-RW and DVD-R drives for PCs.

Accel designs CD-ROM drives for game consoles, half-height and combination CD-RW/DVD and CD-RW drives, and DVD recordable appliances for Ricoh, Sega and Tottori Sanyo, and other optical drive manufacturers.

Oak's recent product development efforts have focused on CD-RW and Combo drives as well as DVD recordable products.

Continued consolidation on the storage landscape is almost guaranteed. Yankee Group analyst and program manager William Hurley said as customer spending tightens, the cash-heavy leaders are picking through the remains of vendors that have been battered by poor revenue performance.

?As it has become a buyers market from a consumer's perspective, it is also becoming a buyers market in terms of merger and acquisition activity," Hurley said.

Heavyweights like Sun Microsystems Inc., and Quantum Corp., have been vocal on the issue, saying in no uncertain terms that they are actively looking at acquisition opportunities.

Let us know what you think about the story, e-mail Kevin Komiega, assistant news editor

For more information:

Sun 'opportunistic' on storage acquisitions

Legato Systems Inc.

DISC Inc.

Oak Technology Inc.

Related Topics: Storage vendors, VIEW ALL TOPICS

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