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HPE Purchases Nimble Storage for $1.090 Billion

$403 million company in hybrid and all-flash storage

Hewlett Packard Enterprise Development LP (HPE) entered into a definitive agreement to acquire Nimble Storage, Inc., the San Jose, CA-based provider of predictive all-flash and hybrid-flash storage solutions.

HPE will pay $12.50 per share in cash, representing a net cash purchase price at closing of $1.0 billion. In addition to the purchase price, the company will assume or pay out Nimble’s unvested equity awards, with a value of approximately $200 million at closing.

Flash storage is a fast-growing market and an increasingly important element of today’s hybrid IT environment. The overall flash market was estimated to be approximately $15 billion in 2016 and is expected to be nearly $20 billion by 2020, with the all-flash segment growing at a nearly 17% CAGR.
 
Nimble’s predictive flash offerings for the entry to midrange segments are complementary to HPE’s scalable mid-range to high-end 3PAR solutions and affordable MSA products. This deal will enable HPE to deliver a range of flash storage solutions for customers across every segment.

In addition, HPE plans to incorporate Nimble’s InfoSight Predictive Analytics platform across its storage portfolio, which will enable a stronger, simplified support experience for HPE customers. For example, InfoSight automatically detects 90% of all issues within a customer’s infrastructure, and resolves over 85% of them.  This dramatically reduces the amount of time and effort a customer’s IT team spends on support activities.  

Nimble Storage’s portfolio complements and strengthens our current 3PAR products in the high-growth flash storage market and will help us deliver on our vision of making Hybrid IT simple for our customers,” said Meg Whitman, president and CEO, HPE. “And, this acquisition is exactly aligned with the strategy and capital allocation approach we’ve laid out. We remain focused on high-growth and higher-margin segments of the market.”
 
Nimble Strengthens and Expands HPE’s Flash Storage Portfolio
Nimble was founded in 2007 and has approximately 1,300 employees worldwide. The company delivered revenue of $402 million in its most recent fiscal year, up 25% year over year. Its  application performance in its entry to mid-range flash storage solutions is backed by an intelligent, predictive analytics engine that delivers a simplified customer experience. This analytics platform goes beyond storage to analyze performance issues across the full data path, from apps to the array, and resolves most issues before they occur. In addition, Nimble has recently introduced multicloud storage services that combine the best of on-premises and public cloud storage capabilities for Hybrid IT deployments.  
 
Customer benefits of the combined HPE and Nimble portfolio include:                  
    •    The ability to seamlessly move data and replicate across hybrid flash and all-flash storage to meet unpredictable IT demands
    •    Integrated data protection with application aware snapshots, encryption, replication and integration with leading ISVs
    •    Effortless management of storage volumes along with data compaction to reduce capacity costs
    •    Predictive support automation to anticipate and prevent most problems and solve remaining issues in a matter of minutes
    •    QoS controls and full stack analytics to ensure predictable performance in hybrid IT deployments
    •    Increased dedicated sales specialist support
    •    A future-proofed technology platform with a roadmap to support next-generation storage
 
Customers deploying hybrid IT not only need the performance of flash storage but are looking for predictive intelligence to optimize their infrastructure,” said Antonio Neri, EVP and GM, enterprise group, HPE. “With Nimble Storage and 3PAR, we can now deliver on those storage needs and provide more effective on-premises control and performance, at public cloud economics.”
 
Deal Accelerates Nimble Financial Performance
By bringing together complementary product portfolios and leveraging HPE’s go-to-market capability, partner ecosystem, and leading server platform, HPE and Nimble will be able to accelerate the financial performance of the combined business.

Over 10,000 enterprises are using Nimble Storage because our Predictive Cloud Platform is reliably fast, simple, and cloud ready,” said Suresh Vasudevan, CEO, Nimble. “This acquisition validates our technology leadership in flash and in the use of cloud-based predictive analytics. We’re confident that by combining Nimble Storage’s technology leadership with HPE’s global distribution strength, strong brand, and enterprise relationships, we’re creating expansion opportunities for the combined company.
 
Transaction Details
The deal is expected to be accretive to HPE earnings in the first full fiscal year following the close.

Under the terms of the agreement, a subsidiary of HPE will commence a tender offer to purchase any and all of the outstanding shares of Nimble common stock for $12.50 per share in cash. Nimble stockholders representing approximately 21% of company’s outstanding shares have entered into a Tender and Support Agreement committing them to tender their shares into the tender offer. The completion of the tender offer is subject to customary terms and closing conditions, including Nimble stockholders tendering a majority of Nimble’s outstanding shares in the offer, and receipt of specified regulatory approvals.
 
Following the successful completion of the tender offer, the agreement provides that Nimble will merge with a subsidiary of HPE and become a wholly-owned subsidiary of HPE, and all remaining outstanding shares of Nimble will receive in the merger the same consideration paid to other stockholders in the tender offer.

Following the completion of the transaction, Nimble shares will be delisted from the New York Stock Exchange.

The tender offer and merger and closing of the transaction are expected to be completed in April, subject to the satisfaction or waiver of the offer conditions set forth in the agreement.

Comments

This deal an excellent opportunity for Nimble's owners, getting more than $1 billion for a company founded ten years ago with $403 million in revenue and $159 million net loss for the most recent fiscal year ended January 31, 2017 (see today's news: Nimble Storage: Fiscal 4Q17 Financial Results), and that got $168 million following an IPO in 2013, after receiving only $98.7 million in financial funding.

Price is relatively low, $12.50 in cash for each share of Nimble, as its shares of stock traded at $30.63 on June 5, 2015 and is below an analyst price target of $17.00.

Other choices for HPE were smaller all-flash start-ups including Kaminario, Nimbus, Tegile, Tintri or ashes of Violin Memory.

Nimble began in hybrid arrays (Adaptive Flash Arrays) launched in 2010 and entered into all-flash arrays (All Flash Arrays) in 2016. The first ones culminate at 1,078TB and the second ones at 372TB of usable capacity respectively.

That's also a good deal for HPE as these arrays are a complement between its own higher and more costly 3PAR flash subsystems on one side, and low end MSA and HPE StoreVirtual at an entry price point on the other side, the difficulty now being to build for customers a bridge to be able to expand from bottom to top. We don't know any company, even Dell EMC, with such a large portfolio of subsystems with SSDs.

Nimble's Predictive Analytics, that collects and analyzes more sensor data points from arrays to correlate vast amounts of information to find the needle in the haystack and solve most complex issues, is also an interesting software for HPE that stated it plans to incorporate the platform across its storage portfolio

The computer manufacturer made another investment this year in another high growth storage business, with the acquisition in January of SimpliVity, in software for hyperconverged infrastructure, proving that storage is crucial for the company even if it records poor financial results since four years in the sector, only $730 million in last 1FQ17 compared to $952 million in 4FQ13. But now, HPE has acquired two firms being able to push drastically its revenue with these new hardware and software with the help of its huge channel compared to what have the two acquired relatively small companies.

There are the two best storage acquisitions, with 3PAR ($2.35 billion in 2010), that helps HPE to survive in storage.

Last year Nimble signed a partnership with Lenovo to offer ThinkAgile CX series of converged infrastructure solutions with all-flash arrays. It will be cancelled as HPE is a competitor of Lenovo and this later plans to introduce new flash storage offerings later this year.

We also suppose that this Nimble's acquisition is in relation with the recent firm's hire of Bob Kelly as board's directors, as he is a general partner at Ignition Partners and served most recently as the corporate VP of merger and acquisition strategy and business development for the cloud and enterprise division of Microsoft.

All acquisitions of Hewlett-Packard and then HPE

Month Year Acquired company Price in $ million About of acquired company
6 1999 Transoft Networks NA SAN management software
9 2001 StorageApps 350 Virtualization software
9 2001 Compaq 25,000 Enormous deal in the PC industry and a big one for storage
12 2003 Persist Technologies NA Grid storage and CAS
5 2005 Schlumberger B'ss Continuity Services NA Disaster recovery services in Ireland
10 2005 AppIQ 300 SRM software
3 2006 Outerbay 100+ Data base archiving software
3 2007 PolyServe NA Software for NAS virtualization
0 2007 Opelin NA Online services including storage, backup and data migration
0 2007 Opsware 1,600 Data center automation and SRM
5 2008 Tower Software NA Document and records management
10 2008 LeftHand Networks 360 iSCSI SAN solutions
7 2009 Ibrix NA Clustered NAS
9 2010 3PAR 2,350 Virtualized storage solutions
8 2011 Autonomy 10,300 UK-based enterprise software company
2 2016 Trilead NA Swiss firm in backup for VMware and Hyper-V
8 2016 SGI 275 HPC
1 2017 SimpliVity 650 Software for hyperconverged infrastructure
3 2017 Nimble Storage 1,090 Hybrid and all-flash systems

 

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