NetApp has entered into a definitive agreement to purchase the Engenio external storage systems business of LSI in an all-cash transaction for $480-million.
The deal is expected to close in about 60 days subject to customary closing conditions. The transaction is expected to be accretive to NetApp’s GAAP and non-GAAP earnings per share by the end of the second quarter of its 2012 fiscal year.
Two of the trends that are driving rapid growth in the storage industry include virtualisation and high performance, big bandwidth applications, which are expected to collectively represent a $5-billion incremental market opportunity by 2014.
Currently, NetApp is a leader for shared, virtualised IT infrastructures, delivering efficiency and flexibility for customers’ next-generation data centres. Engenio will enable NetApp to address emerging and fast-growing market segments such as video, including full-motion video capture and digital video surveillance, as well as high performance computing applications, such as genomics sequencing and scientific research.
NetApp believes it has the channel reach and customer relationships today that require high performance and big bandwidth capabilities that will be well served by Engenio’s storage platform.
The Engenio acquisition will also enable NetApp to expand its market reach with a mature OEM business that will further diversify its channels to market, especially in markets it currently doesn’t address, such as server-attached and embedded storage.
Tom Georgens, president and CEO of NetApp, comments: “We’re excited about the acquisition of the Engenio business and the opportunity to significantly expand our addressable market and generate greater revenue growth. Our customers and partners have helped us emerge as an innovation leader and one of the fastest growing storage vendors in shared, virtualised IT infrastructures.
“With Engenio we will have a strategic storage platform to capitalize on new, high-growth opportunities that we don’t currently reach with our FAS platform. NetApp also gains a proven OEM-based revenue stream that is run by a talented Engenio team.
“We believe that the synergies between NetApp and Engenio will create a compelling combination that will help us continue to scale our business and fuel our continued growth.”
Abhi Talwalkar, president and CEO of LSI, adds: “With its singular focus on storage, NetApp is well positioned to enhance the value of the Engenio business and enable new growth opportunities. NetApp’s channel-friendly approach is highly synergistic with the Engenio model of enabling partner and customer success, and the combination should further advance the Engenio storage platform, as well as augment the OEM channels that have been the foundation of its longstanding success.”