Seeking to expand further into the market for highly scalable network-attached storage devices used to manage vast amounts of data, EMC Corp. today said it plans to acquire Isilon Systems Inc. for $2.25 billion in cash.
The deal, which was approved by Isilon’s board and is subject to regulatory approval, would add a complementary scalable network-attached storage (NAS) product line to EMC’s existing NAS offering, called Atmos, and create a formidable competitor in the fast growing “scale-out NAS” market. Other storage competitors in the space, which IDC says will grow from $2 billion today to $6 billion by 2014, include IBM’s SONAS product, HP’s IBRIX, and Data Direct Networks.
EMC’s bid, which includes a breakup fee should the deal fall through, represents a 29% premium over the value of Isilon’s shares on Friday. EMC CEO Joe Tucci, in a conference call, declined to say if there were other bidders for Isilon. He said the price was justified by Isilon’s strong growth performance and EMC’s plan to leverage the Isilon network-attached storage product line to stimulate its own growth. Last month, Isilon reported revenue of $53.8 million for the quarter ended Sept. 30, an increase of 77% over the same period a year ago.
Tucci said EMC will make the Isilon acquisition pay off by expanding the smaller company’s sales to EMC’s 12,000-person sales and marketing channel. Currently, he noted, Isilon is selling its products only in North America and three European countries. EMC, he said, will be able to sell Isilon’s storage products in 83 countries.