Overland Storage is going away as an independent company. The storage vendor will become a wholly owned subsidiary after its merger with Sphere 3D is completed. Overland’s products will live on, whether or not they have the Overland brand.
Overland and Sphere 3Drevealed their merger plans Thursday. You need a scorecard to keep track of the two companies’ recent mergers. Sphere 3D acquired virtual desktop infrastructure (VDI) software startup V3 Systems in March and now it is merging with Overland, which merged with tape and removable disk cartridge vendor Tandberg Data in January. Overland CEO Eric Kelly, who is also chairman of Sphere 3D, said the Tandberg merger is proceeding as planned. The companies have completed the first of three phases, with phase three scheduled to wrap up by the end of the year.
Sphere 3D will pay $81 million for Overland stock, and the combined companies will be called Sphere 3D. Kelly and Sphere 3D CEO Peter Tassiopoulos discussed the deal on a conference call with analysts Thursday but did not address what the management structure would look like. However, it would make sense for Kelly to remain chairman and Tassiopoulos to stay on as CEO. The execs did not give a projected date for closing the deal, which requires shareholder approval.
Kelly became Sphere 3D chairman last September when the two vendors formed a partnership around developing a storage platform for application virtualization.
Sphere 3D’s Glassware platform allows companies to put applications from PCs, servers and mobile devices in the cloud. The companies have an integrated product running Glassware technology on Overland SnapDX2 NAS appliances.
Kelly said the first phase of the Tandberg acquisition – including integration of supply chains and internal operations – was completed in March and the second phase is due to finish by the end of June. Overland CFO Kurt Kalbfleisch said he expects the Tandberg merger to reduce the companies’ operating expenses by at least $45 million by the end of 2014.
Overland’s long history of losing money continued last quarter when it lost $6.6 million, despite a sharp increase in revenue following the Tandberg deal. Revenue of $22.3 million was double the revenue from the same quarter last year and up from $10.6 million in the last quarter of 2013.
Kelly said the Sphere 3D merger means “as a combined company, we now have greater financial and operational scale, and a clear path for growth and profitability.” He said the business strategy will include selling software, cloud services and appliances. He did not discuss plans for any specific products in Overland’s tape and disk backup, SAN or NAS families.
Of the combined Glassware-SnapSever DX2 product, Kelly added, “as you start looking at what’s happening in the industry in terms of virtualization, in terms of cloud, and how that integrates with the back-end storage, you see that by putting the two technologies together, we have been able to deliver a product line that we believe is the first to the market.”
Kelly said Sphere 3D’s technology will also work with Tandberg’s products, which include tape libraries and drives, RDX removable disk, disk backup and low-end NAS.