DDN to Acquire All Assets of AFA Maker Tintri Just Under Chapter XI

DataDirect Networks, Inc. (DDN) entered into a non-binding letter of intent agreement with Tintri, Inc. to acquire substantially all the assets of Tintri.

Deployed in thousands of data centers in healthcare, energy, manufacturing, financial services, academia and research, DDN’s storage offerings have been a solution for organizations with demanding on premise and hybrid cloud needs.

DDN’s recent acquisition of Intel’s Lustre file system business added the most advanced file system technology to DDN’s already substantial flash, analytics and cloud product portfolio.

“DDN is working with Tintri’s co-founders, team members, advisors and creditors to develop a winning plan designed to provide Tintri’s customers with continuity in support of their installed base as well as a winning roadmap for their long-term requirements,” said Alex Bouzari, DDN CEO and co-founder. “Tintri’s industry leading all flash scale out and automation enterprise storage solutions have been successfully deployed in more than a thousand companies, including 20 of the Top Fortune 100. They are essential tools to help organizations build agile development environments for cloud native applications and run mission-critical enterprise applications better than ever before.”

The proposed transaction would enhance DDN’s portfolio by adding enterprise virtualization, real time analytics and VM automation to its family of high performance scalable storage solutions.

Comments

DDN ($330 million in revenue in 2016) is a privately-held company founded 30 years ago and its shareholders look at their own money with parsimony:

* Last year it invested $10 million in UK Subtree in cloud native data management

* Two months go it bought Intel Lustre File System probably for a small amount as this business was recently stopped

* For Tintri, only ten years old and in deep financial trouble, we bet the price is in the range of tens of million of dollars, no more.

Tintri was saved few times before the form filed for Chapter 11 bankruptcy of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware and then will continue to operate its businesses as a debtor-in-possession under the jurisdiction of the bankruptcy court.

The terms of the potential transaction with DDN are subject to a number of contingencies, including the negotiation and execution of definitive transaction agreements, the completion of a bidding process as provided for by the bankruptcy court, and final approval of the bankruptcy court. Consequently, there can be no assurance that Tintri's efforts to consummate a strategic transaction, including the proposed transaction with DDN, will be successful. Furthermore, even if Tintri were to complete a strategic transaction, the proceeds of any such transaction may be insufficient to allow the company to pay its creditors in full. In any event, Tintri does not anticipate that its stockholders will receive any return on their shares.

Tintri has arranged for financing that is intended to bridge the company to a strategic transaction. This financing is expected to consist of amounts available under a proposed superpriority secured debtor-in-possession credit facility with TriplePoint Capital, LLC, as well as the continued use of accounts receivable collections under the company’s secured credit facility with Silicon Valley Bank. This financing is subject to, among other things, the approval of the bankruptcy court.

DDN is already in AFAs, in high-end subsystems only like Flashscale up to 576TB in 4U and 7.3PB in one rack.

It complements perfectly the mid-range systems from Tintri: T1000 up to 10TB and EC6000 from 19TB up to 40PB.

But IDC ranked the firm only 'contender' with the last position in its MarketScape: Worldwide All-Flash Array 2017 Vendor Assessment, but as named a 'visionary' on 2016 Gartner Magic Quadrant for Solid-State Arrays.

For DDN, the problem will be to approach a new market, not only mainly high-end HPC that it tried not to be entirely dependent, and being involved in AFAs but also in hybrid systems.

Another difficulty will be to pursue the Tintri's business as this firm lost recently a huge amount of employees to survive, only 20 of them remaining and no more one in EMEA.

Of course, the big losers will be Tintri's investors and founders. Main VCs investing in the company were entities affiliated with New Enterprise Associates, Silver Lake Kraftwerk, Insight Venture Partners, and Lightspeed Venture Partners VIII, L.P.

Read also:
Tintri Delisted From Nasdaq: to Cease Operations or to Be Sold, no More Choice
Following $60 million IPO last year
2018.07.10 | Press Release
In Deep Trouble, Tintri Reduced Force by 200 to Preserve Cash Resources
Now with only 40 to 50 employees
2018.06.28 | Press Release
Tintri not in Compliance With Nasdaq
As it had not yet filed quarterly report for fiscal quarter ended April 30, 2018.
2018.06.25 | Press Release
Tintri: Fiscal 1Q19 Financial Results
Out of cash and consequently unable to continue operations beyond June 30, 2018
2018.06.18 | Press Release | [with our comments]
Tintri Down Pricing of IPO
From around $110 million to $60 million
2017.07.03 | Press Release