History 2004: Tandberg Data Offers Itself to Norman, Which Refuses

Tandberg Data approached Norman about a possible merger between the 2 companies, both listed on the Oslo Stock Exchange.

The proposed transaction consisted of an exchange ratio of 3.12 shares in Tandberg Data for each share of Norman, which corresponds to a premium of roughly 10%. But the deal was refused by Norman who declined any negotiations on the subject.

“The industrial synergies are not compelling enough and the financial terms are not attractive to Norman’s shareholders,” the company explained.

“We are surprised that such a well considered merger be disregarded without conducting any form of negotiations,” reported Tandberg, clearly disappointed.

True, the premium was fairly low and the 2 have little in common apart from the fact that they’re both Norwegian companies and (partly, in Norman’s case) in the storage industry.

Tandberg, involved in tape drives and storage subsystems, attained sales of NOK947 million ($112 million) in 2003 and employs some 280 people, while Norman posted NOK260 million ($34 million) in the same period with 220 employees.

More importantly, the first is unprofitable and struggling, the second is healthily in the black.

Norman has 2 business activities, one for anti-virus protection, which represents 70% of its sales, the other, Ibas, for data recovery, which accounts for 30% of its business. While Tandberg and Ibas are both technically in the storage industry, their businesses are far from complementary, if not downright incompatible. How could the merged companies manufacture tape drives or sell disk subsystems while at the same time handling data recovery for damaged tape cartridges or disks?

As one source inside Ibas told us: “It would be like selling both matches and fire extinguishers, or trying to sell life insurance policies in a maternity wing.”

It’s not just a question of bad taste, each product gives the other a bad name.

Another curiosity for the 2 companies (Norway is clearly a small country), the same individual, Svein Ramsay Goli, is chairman of both Norman and Tandberg, while Arne Dalslaan is also on the board of both firms.

Some have suggested that the real point of Tandberg’s proposal was to drive up the company’s price in advance of its own potential acquisition.

Who would buy it? Possibly Imation, which has the very lucrative SLR cartridge market pinned down, or Quantum, which would like to prevent Tandberg from dropping SDLT in favor of LTO …

And then, there’s always someone else. If that letdown weren’t enough, Tandberg Data just lost its exclusivity for sales of Quantum’s tape drives, autoloaders and media in Europe, AsiaPac and Japan.

While it will certainly continue to sell them, this time it will also handle libraries, although Quantum will not deny itself the option of selling in parallel and in fact in competition.

In 1998, both parties agreed that the Norwegian company should become a 2nd source for DLT tape drive manufacturing and sales. Now, however, all units are made by Quantum’s subcontractor Jabil in Penang, Malaysia.

In 2001, Tandberg obtained sales exclusivity in Europe and AsiaPac, something that no longer holds true.

Another of the consequences is the redrafting of the agreements in Europe between distributors of Quantum and Tandberg. This modification of the agreements between the 2 firms, which took effect as of February 1, 2004, comes shortly after we learned that Tandberg was working on an LTO drive – everyone knows that LTO technology is Quantum’s pet peeve.

For Graham Hunt, Quantum’s EMEA marketing manager, the explanation is simpler: “We’ve had trouble selling our automation products without the drives.”

Quantum announced nearly at the same time that Franco Mezzullo, who was VP of the DLTtape group, has been named VP in charge of EMEA integrated operations, as the company will implement a WW channel program integrating all its branded tape and disk-based products, under the label Quantum Alliance.

This article is an abstract of news published on issue 194 on March 2004 from the former paper version of Computer Data Storage Newsletter.