Sun to acquire StorageTek for $4.1B

IDG News Service - Sun Microsystems Inc. will acquire Storage Technology Corp. in a transaction valued at about $4.1 billion, the companies announced today.
Together, the companies have total annual revenue of $13 billion.
The aim of the deal is to create a company that can offer a comprehensive range of data management services to help companies handle security, storage, privacy and regulatory compliance requirements, the companies said.
Under the agreement, Sun will pay $4.1 billion for StorageTek. In turn, StorageTek investors will receive $37 per share in cash.
Scott McNealy, Sun's chairman and CEO, said in a statement that the acquisition helps position Sun "to act as a consolidator in the IT industry."
"With this announcement, Sun solidifies its leadership position with the highest volume computing platforms, the most comprehensive data and identity management solutions and, when combined with StorageTek, an unmatched ability to earn the confidence of customers as they develop, deploy and manage information assets throughout their entire life cycle," McNealy said. "Together, the two companies enjoy financial strength, a complete systems offering, an impressive list of blue chip customers and global reach."
Patrick J. Martin, chairman, president and CEO of StorageTek, said in a statement that the merger will help both companies and their customers.
"By joining forces with Sun to form a combined enterprise with greatly enhanced technological, operational and financial resources, we are positioning that enterprise for accelerated growth and solid performance for years to come," Martin said. "I strongly believe that for StorageTek and all our constituents, this is the right transaction, with the right partner, for the right reasons, at the right time."
The acquisition is part of Sun's strategy to meet customers' needs to rationalize their data center purchases, helping them "free up time and dollars to focus on compliance, architectural integration, security and ... the bottom line," the company said in a statement.
The products and services currently offered by Sun and StorageTek complement one another and will form one of the most comprehensive storage and data management portfolios in the industry, the statement said.
Sun offers a line of storage and networking products that includes the StorEdge 6920 storage system and a platform for virtualization and data services on almost any vendor's storage system.
StorageTek, in Louisville, Colo., has launched a new line of data protection and intelligent archive products, including its Storage Resource management software and virtual tape systems.
Chris Foster, a storage analyst at Technology Business Research Inc. in Hampton, N.H., called the deal "a step backward" because Sun recently hasbeen heading into the services market -- while StorageTek is more of a legacy storage and backup vendor.
"I expected Sun to make an acquisition in professional services or software, and I don't think StorageTek fits that profile. If they were going to spend $4 billion, I thought they would have bought a software company."
Also, he said, StorageTek's margins of about 10% "aren't that great. I think that margin will be pressured."

Computerworld's Todd R. Weiss contributed to this report.