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November 15, 2010, 8:49 AM EST
By Dina Bass and Katie Hoffmann
(Adds earnings multiples in eighth paragraph.)
Nov. 15 (Bloomberg) -- EMC Corp., the world’s biggest maker of storage computers, agreed to purchase Isilon Systems Inc. for $2.25 billion to gain video-storage equipment.
Isilon investors will get $33.85 a share in cash, the companies said in a statement today. That’s 29 percent more than Seattle-based Isilon’s closing price on Nov. 12.
The acquisition of the maker of devices used to store video and digital images lets Hopkinton, Massachusetts-based EMC challenge rivals including NetApp Inc. Isilon hired Frank Quattrone’s Qatalyst Partners to find bidders for a possible sale, two people familiar with the situation told Bloomberg News last month.
Buying Isilon “will give EMC a foothold in the rapidly growing network-attached storage market, which is currently dominated by NetApp,” said Sid Parakh, an analyst at McAdams Wright Ragen in Seattle. He rates Isilon shares “hold.”
Isilon gained as much as $7.91, or 30 percent, to $34.20 in trading before U.S. exchanges opened, after closing at $26.29 Nov. 12 on the Nasdaq Stock Market. The shares had risen almost fourfold this year before today. EMC fell 17 cents to $21.55 in early trading, after closing at $21.72 on Nov. 12 on the New York Stock Exchange.
Storage Acquisitions
EMC wants to lock up one of the independent niche storage vendors as corporate technology companies consolidate data- center offerings along storage, software and servers. In September, Hewlett-Packard Co. snapped up data-storage maker 3Par Inc. following a bidding war with Dell Inc.
“ISLN has built a highly scalable clustered storage system from the ground up and has a good set of products,” Parakh said. “While EMC has some products in this segment and plans to launch more there, they lag both NetApp and Isilon.”
The purchase price is 137 times earnings before interest, tax, depreciation and amortization, compared with the median multiple of 16 times Ebitda for similar deals in the past five years, according to Bloomberg data.
The acquisition is expected to close this year, EMC said. The deal shouldn’t have a material impact on earnings this year and should be accretive in 2011, the company said.
(EMC started a conference call to discuss the deal at 8:30 a.m. New York time. To listen, go to www.emc.com/about/investor-relations/index.htm .)
--Editors: Lisa Wolfson, Ville Heiskanen
To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net; Katie Hoffmann in New York at khoffmann4@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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(Adds earnings multiples in eighth paragraph.)
Nov. 15 (Bloomberg) -- EMC Corp., the world’s biggest maker of storage computers, agreed to purchase Isilon Systems Inc. for $2.25 billion to gain video-storage equipment.
Isilon investors will get $33.85 a share in cash, the companies said in a statement today. That’s 29 percent more than Seattle-based Isilon’s closing price on Nov. 12.
The acquisition of the maker of devices used to store video and digital images lets Hopkinton, Massachusetts-based EMC challenge rivals including NetApp Inc. Isilon hired Frank Quattrone’s Qatalyst Partners to find bidders for a possible sale, two people familiar with the situation told Bloomberg News last month.
Buying Isilon “will give EMC a foothold in the rapidly growing network-attached storage market, which is currently dominated by NetApp,” said Sid Parakh, an analyst at McAdams Wright Ragen in Seattle. He rates Isilon shares “hold.”
Isilon gained as much as $7.91, or 30 percent, to $34.20 in trading before U.S. exchanges opened, after closing at $26.29 Nov. 12 on the Nasdaq Stock Market. The shares had risen almost fourfold this year before today. EMC fell 17 cents to $21.55 in early trading, after closing at $21.72 on Nov. 12 on the New York Stock Exchange.
Storage Acquisitions
EMC wants to lock up one of the independent niche storage vendors as corporate technology companies consolidate data- center offerings along storage, software and servers. In September, Hewlett-Packard Co. snapped up data-storage maker 3Par Inc. following a bidding war with Dell Inc.
“ISLN has built a highly scalable clustered storage system from the ground up and has a good set of products,” Parakh said. “While EMC has some products in this segment and plans to launch more there, they lag both NetApp and Isilon.”
The purchase price is 137 times earnings before interest, tax, depreciation and amortization, compared with the median multiple of 16 times Ebitda for similar deals in the past five years, according to Bloomberg data.
The acquisition is expected to close this year, EMC said. The deal shouldn’t have a material impact on earnings this year and should be accretive in 2011, the company said.
(EMC started a conference call to discuss the deal at 8:30 a.m. New York time. To listen, go to www.emc.com/about/investor-relations/index.htm .)
--Editors: Lisa Wolfson, Ville Heiskanen
To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net; Katie Hoffmann in New York at khoffmann4@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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