Did you hear about the storage acquisition this week?
No, I don’t mean Dell-EMC. Everyone knows about that one. But you might have missed Imation’s acquisition of file sharing vendor Connected Data for $7.5 million, or roughly $66 billion less than what Dell paid for EMC.
The deal is part of Imation’s restructuring. The company also named Bob Fernander interim CEO and added Connected Data founder/CEO Geoff Barrall as chief technology manager. Fernander and Barrall were both already on Imation’s board.
Fernander said he sees Connected Data as a good fit as a companion sale with Imation-owned Nexsan storage as well as Imation’s IronKey encryption product. Imation will pay $4.9 million up front for Connected Data stock and assume $2.6 million of the acquired company’s debt.
Connected Data claims 130 enterprise systems installed and 12,500 of its Transporter devices sold worldwide. Its projected revenue is $7 million for 2016, and the four-year-old startup was not profitable
Barrall said Connected Data’s Transporter provide a more cost effective and easier to manage system for sharing files than using the public cloud. Connected Data keeps all data on-premise, using a company’s existing infrastructure. “We’re changing the face of file sharing in the enterprise,” he said on a conference call to discuss the deal. “Cloud services come with a lot of issues, including high cost, difficulty moving data to the cloud and security issues.”
Fernander said, “While this is a small deal in dollars, it should be a significant contribution to our shareholder value. It allows cloud-live services to be deployed without the cloud.’
Imation, which paid $120 million for Nexsan in 2013, will be looking for Connected Data to become profitable quickly. Imation lost $61.4 million in the 12-year period that ended June 30, and it projects $9 million to $14 million in losses before hitting break-even in the fourth quarter of 2016. Imation estimates it had at least $85 million in cash at the end of the quarter that finished Sept. 30.
Imation sold its RDX removable hard drive business to Sphere 3D for $6.3 million in August as part of its restructuring.
Fernander has been CEO of storage startups Pivot3 and StoredIQ, and has held executive positions at Sun, DEC and Compaq. Barrall founded storage vendors BlueArc and Drobo, which he bought back to merge with Connected Data in 2013 and spun out to a private company in May.