Sun Sets On StorageTek Deal

    June 3, 2005
    WebProNews Staff

The $4.1 billion USD acquisition of the storage solution company creates a single computing and data management company.

The deal will pay $37 per share for StorageTek’s stock, a deal approved by the boards of both companies. StorageTek’s stock has moved in the $28 – $ 34 range, and spiked to $36.36 yesterday on news of the acquisition.

Said Scott McNealy, chairman and chief executive officer, Sun Microsystems, Inc: “With this announcement, Sun solidifies its leadership position, with the highest volume computing platforms, the most comprehensive data and identity management solutions, and when combined with StorageTek, an unmatched ability to earn the confidence of customers as they develop, deploy and manage information assets throughout their entire lifecycle.”

The companies feel their technologies complement each other, making Sun Microsystems a single destination for businesses requiring network computing and data storage management.

But the acquisition may be more of a defensive move for Sun, seen as a takeover target by analysts and investors. Other critics called the acquisition too conservative, citing a need for Sun to have acquired a faster-growing company.

StorageTek’s sales have been steady for five years, with profit increases coming from cost-cutting moves instead. And Sun has lost money for several years. But the purchase may give Sun a boost in selling services. StorageTek has an extensive sales force and service staff.

“We lose to EMC not on product but on field credibility,” Mr. McNealy said, hinting at a likely second reason for the buy: a need for a bigger push into the sale and support of services.

Shareholders and regulators must approve the sale, and that could happen by early fall or even late summer.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.