Category Archives: M&A

Colt, Getronics, M&A, managed cloud, News & Analysis

Getronics buys Colt’s Managed Cloud business

IT services provider The Getronics Group has bought Colt’s Managed Cloud business to add it to a portfolio that includes Getronics, GWA and Connectis. Service provider Getronics said it will now extend the range of offering to a client based it previously serviced on behalf of Colt.

The deal includes the acquisition of Colt’s cloud technologies and support services across the UK, France, Germany, Spain, the Netherlands, Belgium, Italy, India, Romania and Switzerland. The Getronics family of companies will now run the managed cloud services supplied to Colt’s customer base, using Colt’s own network, voice and data centre capabilities.

Colt Managed Cloud has 600 customers across multiple verticals including financial services, media and government. It employs staff working across operations, transition and engagement, presales, service management and support functions.

The Getronics Group, owned by Aurelius since its acquisition in 2012, has previously acquired the Spanish application services divisions of Thales, Telvent and Steria Iberica and NEC’s unified communications direct sales and services divisions in four countries. The Colt Managed Cloud was named as a market leader in Cloud enabled Hosting for three consecutive years by analyst Gartner, in its Magic Quadrant reports.

The Getronics Group has 6,000 employees in 18 countries across Europe, Asia Pacific & Latin America. The IT service provider division of the group has had a long running arrangement with Colt to run its services to its clients and the deal represents a formal transfer of ownership, according to Getronics CEO Mark Cook. “Today’s announcement demonstrates our commitment to offering the latest, best of breed IT services to our customers. We are looking forward to welcoming the transferring customers and employees into the Getronics family in the new year,” said Cook.

The financial terms of the deal are undisclosed.  The completion of this transaction is subject to regulatory and competition clearances and compliance with local labour laws.

acqusition, Dell, EMC, M&A, News & Analysis

Funding of Dell EMC acquisition could scupper deal – report

Dell office logoDell’s $67 billion merger with storage giant EMC could raise a tax challenge that would make their integration unfeasible, according to a re/code report. But the difficulties may be reflected across the industry as cloud drives future convergence, according to one analyst.

Deal’s funding of the EMC takeover, by using a new type of stock share, is under regulatory review and could lead to a $9 billion tax bill. The tax logic is built on the success enjoyed by EMC’s investment in the software vendor VMware, whose value rose by ‘tens of billions of dollars’ after EMC acquired it in 2003.

Dell plans to offer EMC shareholders $33.15 a share for the company, with $24.05 in cash and the balance from tracking stock linked to VMware. EMC owns an 81% stake in VMware. The tracking stock would offset the debt Dell would otherwise be burdened with and help Dell avoid tax.

But the scheme is likely to be reviewed by federal regulators who may revise he tax burden as high as $9 billion, according to the report’s sources.

It reports that Dell management are trying to ensure that key aspects of the deal don’t qualify for the level of transaction tax that would make the merger fail. Dell has reportedly hired the New York firm of Simpson Thacher & Bartlett to influence events in Dell’s favour.

The deal isn’t off, yet, but Dell’s funding options are a bit brazen, said analyst Clive Longbottom at Quocrica. “Dell would do better to sell 61% of the VMware shares direct to the market instead,” said Longbottom.

Making VMware a totally separate business would bring in $20 billion, would be totally legal and result in a much lower tax bill,” said Longbottom. The wider issue for the cloud industry, he said, is the scale of consolidation that is being driven by the cloud and the measures to which companies are big forced to finance them. “These tracking shares worry me. It seems to be a case of smoke and mirrors,” said Longbottom.

“This was never going to be an easy deal and Michael Dell has already stated that it will be a minimum of 9 months before it can close. It then comes down to whether the US government decides that having EMC and Dell survive is a good thing and whether other vendors are also happy for the government to allow this to happen.”

Corporate, IDC, M&A, News & Analysis, SanDisk, Western Digital

Western Digital buys SanDisk for $19 billion for its cloud driving flash

Disk CloudHard disk vendor Western Digital is to buy chip maker SanDisk for around $19 billion as the consolidation of chip-making industry continues.

Flash specialist SanDisk is one of the largest makers of NAND flash memory chips. The capacity of NAND Flash Memory products to store data in a small footprint, while simultaneously using less power but granting faster access to data, has made this technology particularly popular in the mobile, internet of things and data centre sectors, Increasingly, according to analysts, NAND is becoming the storage technology of choice in data centres that support cloud computing.

The market for NAND flash chips rose to $28.9 billion in 2014, according to IDC and SanDisk (with joint venture partner Toshiba) was the largest producer.

Meanwhile the market for traditional disk drives, where Western Digital is a market leader, is declining, say analysts. The commoditisation of hardware, driven by the software definition of data centres, has seen profit margins on sales decline, even if volumes are up.

Western Digital had a leading 44% share of the market for hard disk drives in 2014, according to statistics from market researcher IDC. However, it suffered a sales decline of 4% in its most recent financial year and the overall storage business also shrank, to $32.9 billion.

“With new storage companies coming through with all-flash systems based on consumer-grade substrate, it is not in WD or Seagate’s best interests to try and do economies of scale aimed more at the enterprise only,” said analyst Clive Longbottom, senior director at research company Quocirca. “By buying up consumer flash companies, they get that economy of scale for themselves.”

The disruption of the IT manufacturers by the cloud has changed the strategies of the encumbents like Western Digital, said Longbottom. “ Dell, HP, IBM and others do seem to be more worried about the new kids on the block than each other at the moment,” said Longbottom.

The cash-and-stock offer values SanDisk at $86.50 per share, or a total equity value of about $19 billion, using a five-day volume weighted average price ending on Oct. 20 of $79.60 per share of Western Digital stock. SanDisk’s shares rose 6.4% to $80 in pre-market trading. Western Digital’s shares were down 1.1% at $74.

The deal is expected to close in the third calendar quarter of 2016.

Datacentre, M&A, News & Analysis, TierPoint, Windstream

Tierpoint buys Windstream’s data centre business for $575 Million

Cloud datacentreCloud service provider TierPoint has entered into a definitive agreement with comms vendor Windstream to buy its data centre business for a pure cash transaction of $575 million.

As part of the deal the two will enter a reciprocal partnership, selling each other’s products and services to their prospective customers through referrals. This structure will allow Windstream to focus on its telecom offerings while continuing to offer traditional data centre services to enterprise customers.

The boards of both companies have approved the transaction, which is expected to close within the next two to four months, subject to customary conditions and approvals.

Cloud service provider TierPoint will inherit invaluable data centre support expertise according to CEO Jerry Kent. “This is a great strategic fit for TierPoint and our customers,” said Kent, “Windstream Hosted Solutions and its employees have a reputation for providing excellent customer service and enterprise-class solutions. We value these team members as a key asset in the acquisition and their expertise adds to our strength.”

The long-term strategic partnership with Windstream allows both the comms vendor and the service provider to concentrate on their own strengths and complement each other’s contributions and data centre services are still an integral component of enterprise service explained Windstream’s CEO Tony Thomas. “We expect the divested data centre business to continue its significant growth under the leadership of TierPoint, and we look forward to partnering closely with them to provide advanced data centre services to our enterprise customers,” said Thomas.

The deal has a certain logic, but it’s also illogical in some aspects, said Quocirca analyst Clive Longbottom. “A smaller company trying to compete on non-core data centre activities will always be at a disadvantage, so selling to a data centre expert gives much greater capabilities and flexibility, so at this level, it makes sense,” said Longbottom.

However, he questioned the rational of specialisation followed by duplication of effort. “It leaves Windstream to focus on its comms business on one hand, except it says it won’t, as it will resell data centre services through Tierpoint. And Tierpoint will sell comms services through Windstream. Two companies, selling the same offering, but with overlapping and redundant back office costs, so driving the cost to the customer up,” said Longbottom, “it would make far more sense for the deal to be a merger with two divisions, to my mind.”

Ansible, M&A, News & Analysis, Open Source, RedHat

RedHat to buy DevOps specialist Ansible

Cloud in my handOpen source vendor RedHat has announcement an agreement to buy DevOps specialist Ansible, which creates agentless automation systems designed to simplify the automation of pure and across hybrid cloud environments.

The upstream Ansible open source automation projects on GitHub have an active community of 1,200 contributors and Ansible automation is used by Fortune 100 companies to power large and complex private cloud environments. In 2015 it was granted the InfoWorld Bossie Award in recognition of being the best open source datacentre and cloud software on the market.

Ansible removes some of the most significant barriers to automation across IT, according to Joe Fitzgerald vice president of management at Red Hat. Adding Ansible to Red Hat’s hybrid management portfolio means customers can install and manage cloud applications more easily, use DevOps to improve service delivery, streamline OpenStack projects and make container adoption much easer to orchestrate and configure.

Acquiring the top IT automation and DevOps company will take Red Hat significantly closer to frictionless IT, according to Fitzgerald, but innovation has to be 100 per cent open source and built on open management. “Ansible can help us relentlessly focus on reducing cost and complexity through ease of use and automation,” said Fitzgerald.

The addition of Ansible to Red Hat’s portfolio puts it at the forefront of cloud and DevOps, according to venture capitalist Doug Carlisle, MD of Menlo Ventures.

The acquisition, which will close in October if all conditions are met, won’t affect Red Hat’s revenue for the third and fourth quarters of its fiscal year ending on February 29, 2016. The terms of the deal were not disclosed, but VentureBeat reckons the price was over $100 million.

Management expects that non-GAAP operating expenses for fiscal 2016 will increase by approximately $2.0 million, or ($0.01) per share, in the third quarter and approximately $4.0 million, or ($0.02) per share, in the fourth quarter as a result of the transaction.

According to researcher IDC’s analysis in July 2015, the global cloud systems management software market achieved total revenue of $2.3 billion in 2014. The market is currently forecast to grow to $8.3 billion in 2019.

acquisition, colocation, Datacentre, Digital Reality, M&A, News & Analysis, Telx

Digital Realty completes acquisition of colocation rival Telx for $1.9 billion

datacentreGlobal data centre operator Digital Realty has completed the acquisition of colocation provider Telx in a deal valued at $1.886 billion. Telx will now operate as Digital Realty’s colocation and connectivity line of business.

Funding the acquisition doubles Digital Realty’s footprint in the colocation business and gives it a new interconnection platform, explained William Stein, Digital Realty’s Chief Executive Officer. Digital Realty raised gross proceeds of approximately $1.9 billion of debt and equity capital to fund the Telx acquisition, after settling its forward equity sale transactions with each of its forward counterparties to issue 10.5 million shares and receive $714 million.

Further funding was provided when subsidiary Digital Delta Holdings issued $500 million of 3.400 per cent Notes and $450 million of 4.750 per cent Notes. In August it raised $250 million by closing its underwritten public offering of 10 million shares of 6.350 per cent series I Cumulative Redeemable Preferred Stock.

Stein said the vendor is looking to blend its technical real estate expertise with a more expansive global reach as customers demand new products and services.

“The combination of Digital Realty’s and Telx’s portfolios of data centres and capacity gives customers the platform they need to grow and compete in a data-driven world.  Our focus will give them the ability to scale on a global basis,” said Stein. The company is now so big that nobody can compete with it, he argued. “This acquisition creates unrivalled choice and value, when and where our customers need it,” said Stein.

acquisition, Datacentre, Dell, EMC, hybrid cloud, M&A, News & Analysis, VMware

Dells finds $67 billion to acquire EMC and create cloud giant

Dell office logoAs extensively leaked PC and server outfit Dell today announced it will be acquiring storage giant EMC for $67 billion to create a leading player in the datacentre and cloud industries.

Dell is privately held by founder Michael Dell and VCs MSD Partners and Silver Lake. The combined company will remain private, while VMWare, which is majority owned by EMC will remain separate and publicly traded. This deal is the biggest tech M&A deal of all time and the resulting company will be one of the world’s largest privately held ones. Dell only cost $25 billion to take private, so it’s asking for a big contribution from its equity partners.

As with any massive M&A scale and efficiencies will be major strategic benefits, but the two companies were also keen to stress how much they complement each other, with Dell strongest in the SMB and public sector markets while EMC’s strongest area is blue-chip corporates. In terms of product portfolio the narrative inevitably refers frequently to end-to-end solutions and that sort of thing.

“The combination of Dell and EMC creates an enterprise solutions powerhouse bringing our customers industry leading innovation across their entire technology environment,” said Michael Dell. “Our new company will be exceptionally well-positioned for growth in the most strategic areas of next generation IT including digital transformation, software-defined data center, converged infrastructure, hybrid cloud, mobile and security.

“Our investments in R&D and innovation along with our privately-controlled structure will give us unmatched scale, strength and flexibility, deepening our relationships with customers of all sizes. I am incredibly excited to partner with the EMC, VMware, Pivotal, VCE, RSA and Virtustream teams and am personally committed to the success of our new company, our customers and partners.”
“I’m tremendously proud of everything we’ve built at EMC – from humble beginnings as a Boston-based startup to a global, world-class technology company with an unyielding dedication to our customers,” said Joe Tucci, CEO of EMC. “But the waves of change we now see in our industry are unprecedented and, to navigate this change, we must create a new company for a new era. I truly believe that the combination of EMC and Dell will prove to be a winning combination for our customers, employees, partners and shareholders.”
It’s not difficult to spot the customary synergies in this deal. When Dell went private it was primarily to allow a complete strategic overhaul away from the voracious quarterly demands of Wall Street. Fundamentally it wanted to move out of the highly commoditised PC market on which it was founded in the 80s, and into core enterprise IT sectors such as servers.

EMC has been in the enterprise data storage game for even longer, is been threatened by pure play cloud providers and needs to move with the times. Just as with Dell, EMC seems to be betting that removing the rabid short-termism that comes with being a public company will allow it the space to do that and, assuming MSD and Silver Lake remain patient the new company should be able to innovate and compete well in the cloud, virtualization and IoT worlds.

“We are excited and honoured to invest in the outstanding businesses built by Joe Tucci and his world-class management team,” said Egon Durban, managing partner of Silver Lake. “We believe the strategic integration of EMC and Dell will generate unparalleled depth and breadth across servers, storage, virtualization and the next era of converged infrastructure, creating a global technology platform poised for sustained long term growth and innovation in the years to come. We are doubling down and increasing our investment in this differentiated market leader for the next paradigm of enterprise computing.”

The plan is for Michael Dell to run the whole company and Tucci to move on when the deal is done. A deal this size will take a while to get approval and complete, so nothing concrete will happen for a few months yet. But when it does, the cloud market will hopefully be more competitive than ever.

BYOA, Identity management, M&A, News & Analysis, Software as a service

LogMeIn acquires LastPass for $125 million to create remote access giant

Remote working SaaS company LogMeIn will acquire password management service provider LastPass for $125 million to bolster its position in identity and access management.

LogMeIn already has a strong position in cloud-based remote login and LastPass is best known as a password manager with an emphasis on enterprise, so it’s easy to see how the two product portfolios complement each other. The combined companies will be in a position to offer a wide range of remote access tools and services.

“LastPass has a great business, a beloved and award winning product, millions of loyal users, and thousands of great business customers – they are synonymous with the category,” said Michael Simon, LogMeIn’s Chairman and CEO. “We believe this transaction instantly gives us a market leading position in password management, while also providing a highly favourable foundation for delivering the next generation of identity and access management solutions to individuals, teams and companies.”

“LogMeIn and LastPass share a great common vision on reshaping identity and access management in ways that not only increase productivity but also improve security for individuals and companies, alike,” said Joe Siegrist, CEO of LastPass. “The striking commonality between our businesses, our products, and cultural DNA make this a great fit for both teams, and we believe a great win for our customers.”

In the rationale behind the move there was much talk of BYOA (bring your own app), which LogMeIn has identified as a key trend. Essentially this means remote workers using whatever tools they see fit and IT managers having to work out how to accommodate them – much as has happened with BYOD (bring your own device). LogMeIn’s strategy is to be the default BYOA enabler.

Dell, EMC, M&A, News & Analysis, Storage, VMware

Dell said to be considering EMC acquisition

Dell serversComputing giant Dell is in advanced talks to buy storage company EMC according to a WSJ report, citing the inevitable people familiar with the matter.

A full acquisition seems unlikely since EMC is around double the size of Dell if you compare its $50 billion market cap with the $25 billion is cost to take Dell private. More probable would be for Dell to keep just the storage part of EMC, while spinning off VMware, which is mostly owned by EMC.

Another report from Re/code, which was itself acquired from the WSJ by Vox Media earlier this year, insists only the storage part of EMC has ever been on the table. It also makes the point that Dell would have to add significantly to its current debt pile of $12 billion to fund any deal.

If this move did go ahead it would set a new record for the value of tech-only M&A, topping the $37 billion Avago is paying for Broadcom. Dell is increasingly been moving towards enterprise IT, and away from PCs, since it was taken private by its founder. It has often been outbid by the likes of HP for in enterprise IT acquisitions in the past and EMC may be viewed as a relative bargain, having failed to recover its dotcom bubble highs.

Accenture, acquisition, cloud migration, Cloud Sherpas, M&A, News & Analysis

Accenture to buy Cloud Sherpas to help enterprise clients navigate the cloud

Accenture is to acquire advisory firm Cloud Sherpas, for an undisclosed fee, in a bid to beef up its cloud consultancy as more enterprises seek help with their hybrid computing strategies.

If concluded, the takeover will add 1,100 new staff to Accenture’s newly created Cloud First Applications team, which helps enterprises make their first moves towards a shared computing model.

Atlanta-based Cloud Sherpas has a similar mission statement, offering to guide enterprises through their cloud migrations. Since its creation in 2007 it has grown a global presence with offices in Australia, India, Japan, New Zealand, the Philippines, Singapore, United Arab Emirates and the UK. With its main focus on helping companies to adopt off-premise software-as-a-service (SaaS) systems, its major technology partnerships are with Google, Salesforce and ServiceNow.

Cloud Sherpas has been recognised as a Salesforce Global Strategic Consulting Partner and is one of four ServiceNow Master Partners in the world. It has won Google’s Work Partner of the Year on four occasions.

Accenture, one of Salesforce’s first global partners, currently has 2,700 certified professionals. The acquisition of Cloud Sherpas could bring a further 500 certified professionals to its team. It claims to run 13,000 cloud computing projects, with a clientele that includes three-quarters of the Fortune Global 100. It has a total of 17,000 cloud computing professionals.

“Cloud Sherpas was born in the cloud and we are perfectly aligned with Accenture’s cloud first agenda,” said Cloud Sherpas’ CEO David Northington, “The new organisation should prove a good fit for Accenture’s cloud first push.”

Accenture needs the new intake in order to keep up with the rapid pace of cloud adoption by enterprises, according to Paul Daugherty, chief technology officer of Accenture: “We’ve reached a tipping point as our clients rapidly adopt cloud systems.”

Salesforce president Keith Block welcomed the combination of the firm’s two strategic partners. “It’s proof positive of the momentum around our customer success platform,” said Block.