SanDisk Acquires Pliant Technology for $327 Million

SanDisk Corporation announced a definitive agreement to acquire Pliant Technology, Inc., developer of enterprise solid state drives.

Under the terms of the agreement, SanDisk will pay approximately $327 million in cash and provide certain equity-based incentives. The transaction, which has been approved by the boards of directors of both companies, is subject to customary closing conditions, including regulatory review and approval, and it is expected to close by the end of SanDisk’s second fiscal quarter.

Pliant currently sells high performance enterprise solid state drives based on the SAS protocol with its own Asic-based controller to meet the demanding performance, data integrity and reliability needs of enterprise storage customers. The company’s product roadmap also includes PCIe-based solutions for high-performance compute servers. Pliant uses of multi-level cell (MLC) NAND in enterprise SSDs, and the lower cost of MLC is a key enabler for the broad adoption of SSDs in the enterprise market.

"Flash memory is making significant inroads into the enterprise by dramatically increasing application performance and reducing power consumption," said Sanjay Mehrotra, SanDisk president and chief executive officer. "We believe that the combination of Pliant’s innovative technology and enterprise-level system expertise with SanDisk’s high-quality, large-scale MLC memory production is a winning value proposition for customers. Our advanced flash technology roadmap and flash management capability will complement Pliant’s strengths and allow us to lead the way in reliability and performance in the Enterprise SSD market."

"The Enterprise SSD market is poised for considerable growth, with revenue projected to reach $4.2 billion in 2015, up from $994 million in 2010," according to Joseph Unsworth, research director at Gartner. "This trajectory is fueled by the expanding use of MLC NAND technology, which will require extensive flash management expertise to ensure successful adoption in enterprise applications."

SanDisk expects the transaction to be dilutive to its non-GAAP earnings by 2% to 3% in fiscal year 2011 and accretive to non-GAAP earnings in fiscal year 2012.

Comments

Pliant Technology is not a big power in enterprise SSDs - far from Stec - but has a good technology and signed few big OEMs (Dell, LSI, Teradata).

The start-up was founded in 2006 by former veterans of the HDD industry and got $27 million in three rounds of financial funding. It concentrates on SAS SSDs only, first with SLC and then cheaper MLC chips with its Lightning EFD product family including 2.5-inch and 3.5-inch units with relatively small capacities, from 150GB to 400GB. The press release reveals that Pliant has a roadmap to enter PCIe SSDs.

SanDisk, also based in Milpitas, needed a company like that to move in enterprise units, a fast growing market. The flash memory card giant was only in SATA SSDs for PCs, notebooks and sub-notebooks.

The price of $327 million is a significant amount for such a small start-up but this investment could be lucrative for SanDisk in the long term, the company being able to integrate its own SLC chips manufactured with Toshiba into the storage devices. $327 million is around one third of the worldwide enterprise SSD market in 2010. The problem here is that SanDisk is more involved in the CE rather than in the enterprise market.

This new acquisition could be more valuable than Matrix Semiconductors, in 3D solid-state non-volatile memory ICs, bought by SanDisk in 2005 for $250 million, and much more than msystems, in NAND flash technology, that was purchased for as much as 1.5 billion in 2006.

Maybe do you remember that Seagate was in the nineties a shareholder (25%) of SunDisk that became SanDisk. Now they are going to compete on the same enterprise SSD products.