Veritas Software last month announced it signed two separate agreements to buy application performance management software maker Precise Software and automated server provisioning software start-up Jareva Technologies.
The transaction between Veritas and Precise will be valued at US$537 million, and for Jareva, Veritas will put up $62 million in cash. The deals are expected to close by the end of the second quarter in 2003.
Veritas CEO Gary Bloom Thursday discussed the details of the deals on a conference call. He said the buys will help Veritas broaden its market penetration to application performance and availability management with Precise and "becoming the glue in grid computing" by snapping up Jareva's automation software for server provisioning.
"Precise is in a growth market. Jareva is in a growth market.
And Veritas is in a growth market. The three of us together can just grow faster," Bloom said. He added that Veritas is working toward becoming a $5 billion company and the acquisitions will help it along its ways.
Veritas reported about $1.5 billion in revenue in 2001, and Precise at the time of the deal was valued at about $400 million. Precise shareholders will receive $16.50 in cash.
While exact revenue numbers for Jareva were not disclosed, Bloom said the company's technology and early customer success will offer Veritas future revenue opportunities.
"It's a small revenue company, with very interesting high profile clients. We deployed it ourselves in our labs," Bloom said. "There's a lot of technology there that will integrate well with our strategy, but we are not counting on modeling in any revenue from Jareva at this time."
Veritas officials told attendees on a conference call Thursday that the deal will help to address storage and performance management market that may grow to $11 billion by 2006. Veritas currently employs about 5,600 people, and the company will add 470 Precise employees and 35 Jareva staff members to its headcount.
Veritas said it expects its revenue to remain neutral will the addition of the two companies. Bloom said Veritas will see accretive earnings within 12 months. "These acquisitions are a natural extension of our existing business," Bloom said.
The acquisition of Precise by Veritas follows on the company's acquisition of NTP's StorageReporter software and fills gaps in its product line. Storage Resource Management software has been a hot target for acquisition this year - Sun started the consolidation of the SRM market in April 2001 with the acquisition of start-up HighGround's software. IBM Tivoli and EMC purchased SRM companies in September of this year: Tivoli bought Trellisoft, and EMC took over Prisa Networks this year and acquired SoftWorks in 1999. In 1998, Veritas acquired Windward Technologies and integrated its predictive-failure analysis tools into its storage management products.
The acquistion of Jareva is also important to storage management in that it gives Veritas the ability to automatically provision storage resources. Automated storage managment is a nirvana of sorts for the storage industry. EMC led the industry with the announcement of its Automated Resource Manager software, which allows rules to be applied to automate storage tasks.
With the proposed acquisition of Precise Software, Veritas is extending its reach beyond storage software into the adjacent application performance market. Precise, in Westwood, Mass., enjoyed 20 consecutive quarters of growth and boasts more than 6,000 customers. The acquisition of Precise enables Veritas to ensure that mission-critical applications such as SAP, Oracle, BEA and Microsoft Exchange run faster and have less downtime, Veritas said.
With the proposed acquisition of Jareva, Veritas is extending its reach beyond storage software into the emerging server utilization and automation market. Privately-held Jareva, in Sunnydale, Calif., has synergies with Veritas high-availability software, Bloom said. For example, if Veritas software discovers a server hardware failure it can automatically make a provisioning request for a replacement from a server pool managed by Jareva.
According to the Gartner Group, Veritas is the leading storage management vendor when array-based storage software is excluded.
Analysts say the acquisitions of Precise and Jareva put Veritas smack in the middle of one of the fastest-growing areas of storage management - that of linking storage management to application and performance management in order to improve efficiency of management and operations.
"This is a pretty significant announcement because it is the first very clearly stated intention by a storage management vendor to be tied to the application layer, as well as server automation and provisioning," says Jamie Gruener, senior analyst with the Yankee Group. "It is tying server automation, provisioning, application performance management and storage management into one architecture."
Gruener says that "longer term, vendors will provide tools that have to be integrated from not only the server level but from storage as well - provisioning tools that not only understand the application performance requirements, but how to provision servers and set up the storage environment behind it for the application requirements in one fell swoop. Veritas' acquisitions give a glimpse of that. This ups the ante for EMC, HP and IBM to integrate the different dynamics in the management area."