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Only 43 M&As in 2009 in the WW Storage Industry

Vs. 69 in 2008, 84 in 2007 and 104 in 2006

This is the twelfth
year in a row that we’ve chosen to analyze the merger and acquisition movement
in the worldwide storage industry, which has allowed us the proper perspective
from which to gauge the evolution over time.

There are still
fewer and fewer mergers and acquisitions – this has been the trend since 2006,
but the average per-transaction amount has gone up.

This trend in
storage needs to be seen in the context, however, that the figures result from
a calculation of all storage acquisitions whose amounts were known divided by
their number. In 2009, the average of $612.2 million for 17 transactions
(compared to $216.7 million for 25 transactions in 2008) is heavily weighted by
Oracle’s acquisition of Sun – we have included this operation in 2009 even if
the deal is not closed as of today – for $7.4 billion, while the largest
acquisition of 2008 was “only” $2.8 billion (Foundry by Brocade). It’s then
much more than the overall average since 1998 of $381.3 million.

Everybody also remembers the fight between EMC and NetApp to get Data Domain, finally in the hands of the number one worldwide storage company for 2.2 billion.

Ultimately, 2009
was one of the calmest years we’ve seen since twelve years, with 43 M&As,
compared to 69 in 2008 or -37%, and a 
record of 104 in 2006, the lowest former figure being 45 in 2002. The
economic crisis explains why the storage companies prefer to keep their cash
rather that to spend it for acquisitions last year.

Among the
explanations for this slow-down, we could point to EMC, less prodigal in its
purchases, with only 5 this year compared to 6 the previous year, 10 in 2006
and 17 in 2006 (we don’t count acquisitions by subsidiaries RSA and VMware for activities
outside the realm of storage). The
regular buyers these last years (Adaptec, Bell Micro, IBM, Iron Mountain,
Seagate or Symantec) keep their money in 2009.

More to the point,
however, was that the number of real new technologies – but for cloud storage -,
and thus new start-ups behind them, is going down. Which means there were fewer
companies out there to buy.

Not surprising,
however, was that like last year at 28%, the largest number of acquired
companies were in the software. ‘External HDDs, subsystems and appliances’
category decreased from 18% to 16%, as well as consolidation in distribution from
15% to 14%.

                      KEY FINANCIAL FIGURES SINCE 1998
* Only the deals where the amount was known
 (Source: StorageNewsletter)

      IN 2009                        SINCE 1994
 (Source: StorageNewsletter)


 (Source: StorageNewsletter)

          BY SECTORS IN 2009
 (Source: StorageNewsletter)

WHO BOUGHT WHOM IN 2009 (from A to L)
 (Source: StorageNewsletter)

WHO BOUGHT WHOM IN 2009 (from O to W)

   (Source: StorageNewsletter)


For 2010, we think that the acquisition movement will accelerate, because:

  • 1/ the economic trend is better
  • 2/ consolidation is a general trend in this industry (look at the HDD manufacturing where there are only now six players)
  • 3/ the market capitalization of certain publicly-traded companies becomes so low that they become easy to be acquired, and
  • 4/ there are too many storage start-ups trying to survive and with the only goal to be acquired - or to dye.