EMC Acquires Isilon in $2.25B Storage DealBy Reuters | Print
IT storage giant EMC is shelling out $2.25 billion to buy smaller storage vendor Isilon Systems.
NEW YORK, Nov 15 (Reuters) - EMC Corp (NYSE:EMC), the world's biggest corporate data storage equipment maker, plans to buy smaller data storage firm Isilon Systems Inc (NASDAQ:ISLN) for about $2.25 billion, the latest in a series of multibillion dollar technology deals.
The $33.85-a-share cash offer, announced by both companies on Monday, represents a 29 percent premium over Isilon's closing share price last week at $26.29. Isilon shares were at $33.82 in premarket trading.
The deal comes amid a resurgence of deals in the technology sector, as large, cash-rich companies position themselves for an economic recovery.
Data storage became the focus of investor attention after a heated bidding war earlier this year between Hewlett-Packard (NYSE:HPQ) and Dell (NASDAQ:DELL) over 3PAR. HP eventually won it for $2.4 billion.
Isilon shares had already risen around 56 percent over the past three months on speculation it could be a strong acquisition target after the 3PAR deal.
Another data storage provider, Compellent Technologies Inc (NYSE:CML), held preliminary meetings with bankers to advise it on options including a sale, a source told Reuters last month.
Data storage is considered a crucial part of "cloud computing" -- an increasingly popular technology that enables computer users to access data and storage over the Internet, allowing companies to lower costs.
The growing popularity of online video from media companies, and new software from industries like the life sciences, particularly related to gene sequencing, are expected to create huge amounts of data.
The deal, unanimously approved by the boards of directors of both companies, is expected to close late this year. The companies expect the deal to add to EMC's earnings, excluding one-off charges, in 2011, and would likely not have a material impact this year.
EMC also reaffirmed its outlook for 2010, announced last month, including its forecast for revenue of $16.9 billion, and earnings per share of 91 cents, or $1.25 excluding special items.
The companies agreed to a fee of $10 million in case the deal is terminated, according to a filing with the U.S. Securities and Exchange Commission.
The New York Post earlier reported that a deal between the two companies was imminent, despite an earlier disagreement over the price. (Reporting by Ritsuko Ando in New York and S. John Tilak in Bangalore; Editing by Dave Zimmerman and Derek Caney)