Adaptec Acquisition a ‘Snap’

Looking for a larger slice of the external storage market pie, Adaptec
agreed to purchase Snap Appliance for $100 million in cash and stock.

Adaptec, which develops RAID and iSCSI
software, ASICs and boards, will pay $91
million in cash and $9 million of assumed stock options in the deal. San
Jose, Calif.’s Snap makes a suite of network storage servers for entry-level
to mid-range customers.

While storage area network (SAN) products have been a major
money winner for vendors who cater to large enterprises, NAS remains an
important, less expensive choice for small- and medium-sized businesses, or
departments in large companies.

The move effectively expands Adaptec’s influence in the realm of external
storage, where EMC IBM, HP and Network Appliance compete to store the petabytes of data from customers.

Adaptec saw more than 27 percent growth in this space over the last fiscal
year, buoyed in part by its January
launch of
an iSCSI-to-Serial ATA storage array and Fibre Channel-to-Serial ATA storage

By adding a raft of storage servers to its data-routing and connection
devices, Adaptec will be able to add more revenue streams and, by extension,
make headway in the multi-billion-dollar NAS market.

Enterprise Storage Group Senior Analyst Nancy Marrone said Adaptec should benefit from Snap’s installed base and a broader portfolio.

“The components market is not a big growth market at the moment, but the NAS market has been growing the past few years,” Marrone told “Snap had over 30 petabytes of installed capacity, and has good traction in the entry-level NAS market. Adaptec can use their channels to help grow the Snap business, so the revenue projections seem reasonable, as long as they can effectively execute on the integration of the companies.”

Adaptec, which makes a common software management interface that provides
the same look and feel across all storage devices to reduce maintenance,
said in a statement it expects to benefit from Snap’s GuardianOS software.
This platform will allow the company to provide customers the capability to
manage block and file data on the servers, which store up to 29

Snap Appliance is also a recognized brand, having shipped more than 150,000
servers worldwide, supplying the automotive, chemical, utilities,
banking, industrial, pharmaceutical, government and
education sectors.

Snap Appliance CEO Eric Kelly will continue to manage the business,
reporting directly to Adaptec President and CEO Robert N. Stephens, from
Snap’s San Jose office. Adaptec will create a new division focused on the
development and delivery of storage systems.

“The combination of Adaptec and Snap Appliance achieves one of the most well-rounded,
and broadly distributed, global sales channels in the storage
industry today,” said Stephens in the statement.

Adaptec and Snap have products installed in more than 90 percent of the
Fortune 500 companies and have delivered more than 30 petabytes of storage
capacity, according to a fact sheet.

Adaptec said the transaction, expected to close by the end of July, will
generate more than $40 million in new revenue over the next four quarters.
The deal is Adaptec’s first buy since it
Elipsan, a maker of storage virtualization software, back in January.

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