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Dell to snap up Compellent

Alex Kayle
By Alex Kayle, Senior portals journalist
Johannesburg, 21 Jan 2011

Hardware giant Dell has entered into a definitive agreement to acquire Compellent Technologies, a virtualised storage solutions provider. This is a few months after Dell lost a 3Par bidding war against HP.

Under terms of the agreement, approved by the boards of directors of both companies, Dell says it will pay $27.75 per share in cash for Compellent, for a total equity value of approximately $960 million.

This will amount to an aggregate purchase price of approximately $820 million, net of Compellent's cash.

Dell says the transaction, which is subject to approval by Compellent's shareholders and customary closing conditions, is expected to close early 2011.

Storage strategy

Upon closing the transaction, Dell says it will make Compellent an integral part of its storage portfolio, which includes PowerVault, EqualLogic and Dell/EMC.

The company says the acquisition is part of its plans to expand its portfolio on enterprise storage solutions and data management.

It has also signed a reseller agreement with Compellent to extend its storage portfolio to Dell's worldwide customer base, effective immediately. Dell plans to maintain Compellent's channel programme.

Stewart van Graan, general manager of Dell Africa and managing director of Dell SA, says: “This reseller agreement and pending acquisition is the next step in Dell's strategy to help customers better manage their data growth, reduce storage costs and simplify the management of their IT infrastructure.”

He adds: “The opportunity to acquire Compellent complements our strategic acquisitions of EqualLogic, Scalent, Ocarina and Exanet by extending Dell's key intelligent infrastructure tenants of automation, optimisation, scalability and virtualisation.”

The IT corporation says it plans to keep Compellent's existing operations in the US and will invest in engineering, support, operations and sales capability to grow this business.

Van Graan did not disclose details about how of if the Compellent deal would impact South African Dell operations.

Virtualised storage

Brad Anderson, Dell's senior vice-president of the enterprise product group, says Compellent is a natural complement to Dell's enterprise storage portfolio.

“The Compellent storage platform will enable Dell to provide customers additional mid- and high-end network storage solutions that simplify and reduce the cost of data management,” he says.

“Compellent's design focus on intelligently managing data to increase efficiency, agility and resilience is consistent with Dell's approach of building solutions that can quickly scale to meet the most demanding enterprise environment,” adds Anderson.

Phil Soran, president, CEO and chairman of Compellent, explains that it will use Dell's scale to accelerate the adoption of its virtualised platform called Fluid Data.

Bidding war

Last September, Dell lost a high-profile bidding war against tech giant HP to acquire data storage provider 3Par for $2.35 billion. According to reports, Compellent had been a potential target for Dell.

HP previously told ITWeb it was in the process of integrating 3Par's utility storage products with HP's existing storage solutions.

Tumi Pooe, sales and business unit manager of HP's Storage Works Division claimed 3Par is a good fit for the South African market in terms of storage virtualisation and the fact that many companies are starting their system refreshes this year.

Dell claims that the storage industry is moving towards offering unified storage products. Anderson claims that the Compellent deal will make Dell more competitive in the enterprise storage space.

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