Sandisk Acquires Fusion-io for USD 1.1 Billion

Sandisk, the flash chip maker is buying US-based Software enterprise, Fusion-io for USD 1.1 Billion to scale up its flash storage business and to boost non-GAAP earnings from the second half of fiscal 2015. The deal is expected to close in the third quarter of its fiscal 2014. 

Fusion-io was launched in 2006 and went public on December 8, 2008. It is known for offering a platform that accelerates cloud computing, virtualization, databases, big data and performance applications. Recently, the company had raised three round of investment viz. Series A (USD 19M, 2008), Series B (USD 47.5M, 2009) and Series C (USD 45M, 2010). The firm has secured a total funding of USD 111.5 million till date.

It is backed by 10 investors including Dell, Accel Patners, Light Speed Venture partners and others. At present, the company provides 7 products such as io Scale, io Turbine, ioVDI, ioFX, ioDrive2 Duo, ioControl Hybrid Storage Appliance and ioDrive2.

Also, the company had made three acquisitions including NexGen storage, ID7 in 2013 and IO Turbine in 2011 for USD 95 million.

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Times of India says: The company’s offer of $11.25 per share represents a premium of 21% to Fusion-io’s Friday close. Fusion-io’s shares were trading at $11.61 before the bell on Monday, suggesting that some investors were expecting a higher offer for the company. 

The deal also makes the company less vulnerable to dramatic swings in prices of memory chips that have historically plagued the industry. 

Fusion-io, which employs Apple co-founder Steve Wozniak as its chief scientist, has reported a loss for five quarters in a row. 

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Market Watch says: “Fusion-io will accelerate our efforts to enable the flash-transformed data center, helping companies better manage increasingly heavy data workloads at a lower total cost of ownership,” Chief Executive Sanjay Mehrotra said in a statement. Goldman Sachs was financial adviser to SanDisk, while Skadden, Arps Slate, Meagher & Flom LLP was legal adviser.

Forbes says: Fusion-io has had a bumpy trading year. Even with Monday’s surge, shares remain well below the stock’s $15.59 52-week high. Around this time last year, FORBES’ Nathan Vardi wrote a post called “Fusion-IO: The Other Hot Tech IPO That Went Badly.” Fusion-io, he noted.

Reuters says: “(SanDisk) was already positioning the company as more of a enterprise storage company. … What the Fusion-io deal does is it enhances that significantly,” Cross Research analyst Steven Fox said.

The deal follows a trend toward vertical integration in the storage market, with chipmakers buying smaller companies with specialized technology.

BloomBerg says: “SanDisk has been trying to get into enterprise big time. With the acquisition of Fusion, they get there faster,” said Srini Nandury, an analyst at Summit Research Partners LLC. “It helps them get to the market quickly, gives them a brand name.”

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