… NetApp to Purchase LSI Engenio External Disk Systems

NetApp, Inc. has entered into a definitive agreement to purchase the Engenio external storage systems business of LSI Corporation in an all-cash transaction for $480 million.

The close is anticipated to occur in approximately 60 days subject to customary closing conditions. The transaction is expected to be accretive to NetApp’s GAAP and non-GAAP earnings per share by the end of the second quarter of its 2012 fiscal year.

Two of the trends that are driving rapid growth in the storage industry include virtualization and high performance, big bandwidth applications. Today, NetApp is a leader for shared, virtualized IT infrastructures, delivering exceptional efficiency and flexibility for customers’ next-generation data centers. Engenio will enable NetApp to address emerging and fast-growing market segments such as video, including full-motion video capture and digital video surveillance, as well as high performance computing applications, such as genomics sequencing and scientific research. NetApp has the channel reach and customer relationships that require high performance and big bandwidth capabilities that will be well served by Engenio’s storage platform.

These segments are expected to collectively represent a $5 billion incremental market opportunity by 2014. The Engenio acquisition will also enable NetApp to expand its market reach with an OEM business that will further diversify its channels to market, especially in markets it currently doesn’t address, such as server-attached and embedded storage.

Tom Georgens, president and CEO, NetApp, said: "We’re excited about the acquisition of the Engenio business and the opportunity to significantly expand our addressable market and generate greater revenue growth. Our customers and partners have helped us emerge as an innovation leader and one of the fastest growing storage vendors in shared, virtualized IT infrastructures. With Engenio we will have a strategic storage platform to capitalize on new, high-growth opportunities that we don’t currently reach with our FAS platform. NetApp also gains a proven OEM-based revenue stream that is run by a talented Engenio team. We believe that the synergies between NetApp and Engenio will create a compelling combination that will help us continue to scale our business and fuel our continued growth."

Abhi Talwalkar, president and CEO, LSI Corporation, said: "With its singular focus on storage, NetApp is well positioned to enhance the value of the Engenio business and enable new growth opportunities. NetApp’s channel-friendly approach is highly synergistic with the Engenio model of enabling partner and customer success, and the combination should further advance the Engenio storage platform, as well as augment the OEM channels that have been the foundation of its longstanding success."

People and Organizational
NetApp gains a team from Engenio with engineering expertise that will continue to develop the Engenio platform and enable NetApp to capitalize on the new market opportunities that will fuel its growth. In addition, NetApp gains a team that is skilled at managing an OEM business model with industry partners.

The Engenio business unit will be integrated into NetApp’s business functions and will be responsible for product development under Manish Goel, executive vice president of NetApp Product Operations. The NetApp and Engenio sales teams will be combined to maximize opportunities for the Engenio platform.