Quantum Corp. (NYSE:DSS), a global leader in storage, today announced it has signed a definitive agreement to acquire Certance, a privately held and leading global supplier of tape drives and data protection solutions. With the acquisition, Quantum will offer end-users an unparalleled range of leading tape technology choices for best meeting their individual backup, recovery and archive needs. The acquisition will also enhance Quantum's tape drive and media business by expanding its product and intellectual property portfolio, broadening its end-user customer base and further strengthening its revenue-and-cash generating foundation. The acquisition of Certance, which has been profitable for three consecutive years, is expected to be accretive in the combined company's first year.
Under the terms of the definitive agreement, Quantum will acquire all of Certance for $60 million in an all-cash transaction, and integrate it into Quantum. This purchase price excludes the distribution to the sellers of up to $34 million cash from Certance's balance sheet. The closing of the transaction is subject to antitrust review, as well as other customary closing conditions and Quantum expects the acquisition to close within the fourth calendar quarter of 2004.
Rick Belluzzo, chairman and CEO of Quantum said: "Today's announcement reinforces Quantum's commitment to providing customers with tape technologies best suited for current and future environments. As a newly combined $1 billion company building on Quantum's and Certance's complementary strengths, we will offer the industry's broadest portfolio of tape and disk systems for backup, recovery and archive."
Howard Matthews, president and CEO of Certance said: "Certance has made its mark as a leader in developing, manufacturing and marketing innovative new data protection solutions for companies of all sizes. We are excited about this combination because of the opportunity it provides both Certance and Quantum to serve an even broader range of customer needs with regard to reliability, capacity, performance and value."
Bob Abraham, president of Freeman Reports said: "This is a superb move because the two companies have historically been strongest in different parts of the market - Certance in the entry-level and Quantum in the mid-range. The combination will create operational synergies, benefiting end-users and helping to address the desire of system OEMs and tape automation providers to streamline supply chain management."
As a result of the Certance acquisition, Quantum will add Travan, DDS/DAT and LTO Ultrium-format technology products to its current portfolio of DLTtape drives, as well as a DAT-72 autoloader and a disk-to-disk-to-tape appliance for small and medium-size businesses (SMB). Quantum's media model will also benefit from the recurring revenue stream provided by media royalties and branded media products. The addition of LTO technology devices to Quantum's Storage Devices product lines will create greater alignment with Quantum's Storage Systems business, which already offers LTO Ultrium-format drives in its tape automation systems.
The complementary nature of this combination can be seen in more than just the end-users the two companies serve. For example, while both companies sell through OEMs and the channel, Certance has a particularly robust channel business that aligns well with the strong relationships Quantum maintains with all major system OEMs and tape automation providers. In addition, Certance's broad, global channel presence will reinforce the progress Quantum has made over the past year internationally in further expanding its branded channel business and pursuing opportunities for increased growth.
Both Certance and Quantum have a strong intellectual property base and history of customer-driven innovation in their tape drive products. Certance is an established leader in DDS/DAT development and a co-founder of the LTO Ultrium-format technology. It was also the first company to introduce a disk-to-disk-to-tape appliance for SMB customers offering high-end functionality at an SMB-affordable price point. Quantum created DLTtape technology and introduced the first tape drive with over a half-terabyte of capacity.* The company is also the leader in developing device-level manageability tools, including DLTSage(tm) and DLTIce(tm). DLTSage is an award winning diagnostic architecture for predicting and preventing tape drive and media failures, and DLTIce serves the burgeoning regulatory compliance market by providing Write Once, Read Many (WORM) functionality using a standard Super DLTtape II media cartridge.
Quantum's acquisition of Certance is just the latest example of actions the company has taken over the past year to continue at the forefront of meeting customers' evolving storage needs. Last autumn, it introduced three best-in-class products: the SDLT 600 tape drive, PX720 tape library and DX100 disk-based enhanced backup system. This summer Quantum not only launched DLTIce but also announced a new DLT roadmap that includes plans to deliver over 10 terabytes on a single media cartridge within the next decade.
Also over the past year, Certance has been the first in the industry to introduce a range of new products, including an LTO-3 tape drive, a DAT-72 autoloader, and a disk-to-disk-to-tape appliance for SMB customers.
Ken Hao, managing director, Silver Lake Partners, speaking on behalf of the New SAC investment group, the seller said: "We are proud of Certance's accomplishments as an independent company spun out from Seagate four years ago. We are confident that Certance's long-term strategic objectives will be accelerated within Quantum."
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