The Norwegian tape drive maker provides "reprieve" for a struggling U.S. firm by creating a new $215 million company.
Digital tape storage manufacturer Tandberg Data announced Aug. 30 that it is acquiring a competitor, U.S. data storage company Exabyte, for $28 million in cash and stock.
In the transaction, Oslo-based Tandberg Data will pay $22 million in cash at the closing of the deal, which is expected to take place in Q4.
The merged company will have projected revenue of $215 million for 2006, Tandberg executive vice president Ken Cruden told eWEEK.
If so, it will trail only Quantum/ADIC ($814 million in 2005 revenue) among manufacturers of tape drives and tape automation equipment, he said.
Tandberg Data, whose U.S. headquarters is in Poway, Calif., makes professional-level tape information storage hardware and software based on the SLR, LTO and DLTtape linear technology platforms.
Exabyte, based in Boulder, Colo., makes tape backup, restore and archival systems for small to midsize businesses.
"This is a good deal for both companies and the industry," said Robert Amatruda, storage analyst with IDC in Framingham, Mass.
"Its a reprieve of sorts for Exabyte, which has been on shaky financial ground for some timenot because of any missteps on its own part, but mainly because the SMB tape drive market is dominated by so many large suppliers, like IBM and HP; its main problem has been a market-access issue."
Amatruda also said the deal gives Tandberg a good foothold in the U.S. market.
"These guys had no previous U.S. market presence at all," Amatruda said. "They do share a major customerIBMwhich buys their drives. Spiritually, its a good move for both companies."
Amatruda questioned whether the new Tandberg-Exabyte company will actually be No. 2 in the tape drive market.
Click here to read more about Exabytes tape drives aimed at SMBs.
"This is an industry that is loaded with OEMs," Amatruda said. "Its really hard to sort out whos really the leader in this market. Everything is sold, re-branded and re-sold through channels, so its a tangled area. Certainly, IBM, HP, Quantum, NetApp, Sun StorageTek, EMC, and a few others are all key players in this category."
The new company will be able to offer an enhanced menu of advanced storage and automation systems to small and medium-sized enterprises.
The merged company will have a strong sales and marketing position in Europe and Asia, thanks to Tandbergs channel presence in those areas, the spokesperson added.
"Tandberg Data and Exabyte complement each other well in terms of both products and markets, and will jointly take a clear second place," said Tandberg Data chief executive Gudmundur Einarsson.
The complementary strengths of the two companies in the various geographic markets around the world will result in a new global competitor in the storage industry, said Exabyte CEO Tom Ward.
"The combined product portfolios of the two companies will provide the full range of state-of-the-art, cost-effective products and technologies to meet [customers] needs," Ward said.
"The operational synergies resulting from the combination will allow the new company to operate from a position of financial strength and stability in the future."
This merger opens opportunities which the two companies on their own could not have succeeded in realizing in the short term, Einarsson added.
"Thats important at a time when the computer industry is characterized by a powerful process of consolidation. We find that our dealers constantly want more complete answers to data security. With Exabytes technology, well be able to offer better solutions for data storage and automation," Einarsson said.
To finance the acquisition, Tandberg will issue a $35 million bond loan, which has been fully committed by Cyrus Capital.
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Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz