Adaptec Acquisition a ‘Snap’

Looking for a larger slice of the external storage market pie, Adaptec has agreed to purchase Snap Appliance for $100 million in cash and stock.

Adaptec, which develops RAID and iSCSI software, ASICs and boards, will pay $91 million in cash and $9 million of assumed stock options in the deal. San Jose, Calif.-based Snap makes a suite of network storage servers for entry-level to mid-range customers.

While storage area network (SAN) products have been a major money winner for vendors who cater to large enterprises, NAS remains an important, less expensive choice for small- and medium-sized businesses, or departments in large companies.

The move effectively expands Adaptec’s influence in the realm of external storage, where EMC IBM, HP and Network Appliance compete to store the petabytes of data from customers.

Adaptec saw more than 27 percent growth in this space over the last fiscal year, buoyed in part by its January launch of an iSCSI-to-Serial ATA storage array and Fibre Channel-to-Serial ATA storage system.

By adding a raft of storage servers to its data-routing and connection devices, Adaptec will be able to add more revenue streams and, by extension, make headway in the multi-billion-dollar NAS market.

Enterprise Storage Group Senior Analyst Nancy Marrone-Hurley said Adaptec should benefit from Snap’s installed base and a broader portfolio.

“The components market is not a big growth market at the moment, but the NAS market has been growing the past few years,” Marrone-Hurley told Enterprise Storage Forum. “Snap had over 30 petabytes of installed capacity, and has good traction in the entry-level NAS market. Adaptec can use their channels to help grow the Snap business, so the revenue projections seem reasonable, as long as they can effectively execute on the integration of the companies.”

Enterprise Management Associates Senior Analyst Mike Karp said the acquisition gets Adaptec “NAS products in a hurry,” including a low-end entry point and a low-to-midrange set of NAS products.

Adaptec, which makes a common software management interface that provides the same look and feel across all storage devices to reduce maintenance, said in a statement it expects to benefit from Snap’s GuardianOS software. The platform will allow the company to provide customers the capability to manage block and file data on the servers, which store up to 29 terabytes.

Snap Appliance is also a recognized brand, having shipped more than 150,000 servers worldwide, supplying the automotive, chemical, utility, banking, industrial, pharmaceutical, government and education sectors.

Snap Appliance CEO Eric Kelly will continue to manage the business, reporting directly to Adaptec President and CEO Robert N. Stephens, from Snap’s San Jose office. Adaptec will create a new division focused on the development and delivery of storage systems.

“The combination of Adaptec and Snap Appliance achieves one of the most well-rounded, and broadly distributed, global sales channels in the storage industry today,” Stephens said in a statement.

Adaptec and Snap have products installed in more than 90 percent of the Fortune 500 companies and have delivered more than 30 petabytes of storage capacity, according to a fact sheet.

Adaptec said the transaction, expected to close by the end of July, will generate more than $40 million in new revenue over the next four quarters. The deal is Adaptec’s first buy since it purchased Elipsan, a maker of storage virtualization software, back in January. Adaptec also acquired RAID technology from IBM recently.

Article courtesy of InternetNews.com