Emulex said Tuesday it has reached a definitive agreement to acquire Sierra Logic for US$180 million to expand its position in the embedded storage components market.
The acquisition will combine two suppliers of network storage components and may improve the reliability of storage networks that enterprise customers depend on.
Sierra's line of embedded bridges and routers will join Emulex's portfolio of embedded switches and multiple protocol input/output controllers. The combination will make Emulex more competitive in selling to storage system makers, said Mike Smith, Emulex's executive vice president for worldwide marketing. Emulex's current customers include Sun Microsystems, Hitachi Global Storage Technologies and Network Appliance.
"There is always a trend toward integration, and you can offer more integrated solutions the more pieces you provide. It makes you more of a single, trusted supplier," Smith said.
The deal gives Emulex access to key technology developed by Sierra Logic to make SATA (Serial Advanced Technology Attachment) storage systems more reliable, said storage industry analyst Arun Taneja, founder of The Taneja Group.
Fibre Channel disk drives are used in high-end storage environments, while SATA drives are a lower cost alternative. But SATA drives are less reliable than Fibre Channel. Sierra Logic's technology makes SATA more reliable, Taneja said.
"Sierra makes a SATA drive look like a Fibre Channel drive but maintains the price advantage of SATA," said Taneja. "Emulex looked at the technology and said 'It's too important to this industry. I want to own it.'"
Consistent with its integration strategy, Emulex also acquired Arohi Communications, a maker of data center networking and intelligent storage platforms, in May for US$39 million.
The Sierra Logic deal is expected to be completed by Sept. 30 and to contribute an incremental US$8 million to US$10 million in revenues to Emulex in the fourth quarter.
Emulex has about 600 employees worldwide, while Sierra Logic has 70 employees. Smith expects most of them to come to Emulex, including Sierra Logic Chief Executive Officer Bob Whitson.