Imation Buys encryptX

Imation Corp. has acquired encryptX Corporation, in encryption and security solutions for removable storage devices and removable storage media.

Approximately 10 employees will transfer from encryptX to Imation; other terms of the transaction were not disclosed. The acquisition, which follows Imation’s recent unveiling of its strategic direction as a technology company focused on growth opportunities in data storage, protection and connectivity, includes a portfolio of software solutions and intellectual property that allow enterprises to protect, encrypt, control, and manage ‘data at rest.’

"We are excited to bring the talented encryptX team and their portfolio of software solutions into Imation," said Mark Lucas, president and chief executive officer, Imation Corp. "As a global leader in data storage, Imation understands the importance of protecting sensitive data against loss, theft, or security breaches, and has successfully partnered with encryptX in the past to develop elements of our Defender Collection of highly secure storage media and software solutions."

"Imation and encryptX have shared a similar vision for helping enterprises – from government agencies to large businesses ranging from financial institutions to healthcare organizations – to better manage security of removable storage," said David Duncan, former encryptX president, who will remain with the organization and lead security software development for Imation. "Now, by combining the global reach and broad storage portfolio of Imation with encryptX leading security solutions, we intend to expand our offerings to address the growing need for data security worldwide."

The encryptX portfolio includes encryption, device management and control, and digital rights management solutions that protect removable drives, flash drives, CDs, DVDs and PC data. encryptX products are U.S. Government approved for purchase under a U.S. Government ESI/SmartBuy Contract.

Comments

This deal is the first one following the new strategic direction of Imation to come back to growth.

The price to get encryptX has not been revealed but is probably relatively low, we bet around no more than $10 millions, for two reasons: it's a small company and Imation said that it wanted to acquires firms "each ranging from a few million dollars to $50 million".

The storage media company never was a specialist of encryption and get here a technology that can be apply to several of its external storage devices (USB keys, flash cards, RDX, external HDDs), for burning writable optical discs, and eventually for PCs.

Founded in 1999 by a former cryptologist with the National Security Agency to develop encryption solutions for 'data in motion', encryptX raised $7.5 million in private and venture capital prior to a buyout by BeCompliant in March 2007. We note that three executives, 'the three Dave', came from StorageTek that was partnering with Imation for tapes: president and founder Dave Duncan, CTO Dave Miers and VP engineering Dave Farmer. The encryption firm states that "over 100 large organizations, thousands of small/medium businesses and millions of consumers worldwide protect their data, devices and email with our products."

Imation was already one of its partners, and BeCompliant signed OEMs including as Gemalto, Hagiwara Sys-Com, Lexar Media and Micron.

In our opinion, this deal is a first step for Imation to evolve its business model but it's not enough to radically increase its revenues. We are waiting for more acquisitions.