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EMC grabs Isilon for $2.25 billion

Following a month of speculation, EMC today said it has agreed to acquire Isilon for $2.25 billion and pegged the scale-out NAS vendor’s portfolio as a key addition to its cloud storage strategy.

In the press release announcing the deal, EMC categorized Isilon and its Atmos object-storage platform as complementary platforms for managing “Big Data” in private and public clouds, and said the combined revenue will reach a $1 billion run rate by the second half of 2012.

EMC definite “Big Data” as “a term used to describe the massive amount of data produced by a new generation of applications in markets such as life sciences (e.g. gene sequencing), media and entertainment (e.g. online streaming), and oil and gas (e.g. seismic interpretation) to name a few.”

EMC clearly sees Isilon’s products as a different category than its Celerra platform, which supports mainstream NAS as well as iSCSI storage.

EMC said both companies’ boards have approved the deal, and it expects the acquistion to close by the end of the year.

EMC will pay $33.85 per share for Isilon stock, which is a 29% premium to Isilon’s Friday closing price of $26.29. That’s a high price, considering Isilon was barely profitable. Isilon reported $4 million in net income on $53.8 million in revenue last quarter, its most profitable ever. The $2.25 billion price tag suggests there may have been another suitor for Isilon, as was the case when Hewlett-Packard acquired 3PAR in September for $2.35 billion after winning a bidding war with Dell. The usual suspects — Cisco, Dell, HP, IBM, NetApp and Oracle – have all been mentioned in analyst reports as possible suitors for Isilon.

Perhaps anticipating claims that EMC overpaid for Isilon, EMC spokesman Michael Gallant included a reminder of EMC’s acquisition track record in the e-mailed press release on the Isilon deal.

“EMC has a long and highly successful track record of acquiring, integrating and growing leading IT companies, like Isilon (think Data Domain, VMware, Avamar, etc.),” Gallant wrote. “Since 2003, EMC has also invested more than $13 billion on more than 50 strategic acquisitions.”

Check later today for more on this acquisition.

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