SevenSpace, Nuclio to Unite

The merger of two veteran MSPs will create the industry's largest pure-play provider.

In an industry marked more by cutbacks and layoffs than big business deals, a pair of veteran MSPs have decided to join forces, hoping broader offerings and greater geographic reach can help them survive.

Officials at SevenSpace Inc. and Nuclio Corp. said theyll announce a merger this week in a move that will create the industrys largest pure-play management service provider. The combination of the privately held companies, to be known as SevenSpace/Nuclio Corp., will create an MSP with extensive remote management services and with operation centers nationwide.

SevenSpace, of Chantilly, Va., which last year acquired Stratasource Inc., brings a broad portfolio of application management services. Nuclio boasts expertise in and services for network storage and servers.

Nuclio, of Oakbrook Terrace, Ill., brings an infusion of cash from its parent company, Forsythe Technology Inc., as well as a distribution arm via Forsythes sales organization.

The combination will share a customer base of about 150 businesses, including Xerox Corp., and partnerships with Exodus Communications Inc., Hewlett-Packard Co. and KPMG Consulting Inc.

In the short term, Nuclio customer Jim Ritchey said he sees no impact on the relationship that his business, Indeliq, an Accenture Ltd. company, has with Nuclio.

Longer term, the merger offers more opportunities. "Being a larger organization and offering me more network points allows me different growth options in the future," said Ritchey, vice president of technology and operations at Indeliq, in Chicago. "Now I could decide to bring sites up in different locations and have the same level of service."

SevenSpace and Nuclio officials touted the deal as a positive business and cultural fit.

"We kept being recognized mutually for our success. As this industry consolidates, we thought wed do even better together. This is a great opportunity to put two like-minded, capable companies together," said Eva Losacco, senior vice president at Forsythe, based in Skokie, Ill.

The combined company is on target to achieve profitability by the third quarter, according to SevenSpace CEO Peter Weber, who will lead the new company.

The merger will put SevenSpace/Nuclio in a good position to survive the shakeout in the overcrowded MSP space, but it also brings the company more directly into the sights of large outsourcers such as AT&T Corp., Electronic Data Systems Corp. and IBM Global Services, which are all striving to be MSPs.