NetApp has agreed to acquire the Engenio external storage systems business of LSI for US$480 million in cash, aiming to serve new applications with growing demands for storage and to get into original-equipment manufacturing (OEM) arrangements with more system manufacturers.
The acquisition deal, announced on Wednesday, is expected to close in about 60 days. NetApp is based in Sunnyvale, California, and LSI is in nearby Milpitas.
In the highly competitive storage industry, NetApp has offerings in a wide range of technologies and is focused on differentiating itself with a unified management approach under which multiple types of systems can be managed as one system.
With the Engenio acquisition, NetApp aims to reach vertical markets with large and growing demands for storage capacity, such as surveillance, full-motion video capture, genomic sequencing and scientific research. These are applications that are not addressed by the company's core Data OnTap operating system today, said Tom Georgens, president and CEO of NetApp, in a conference call following the announcement. These will expand NetApp's total addressable market by about $5 billion by 2014, he said.
NetApp also expects the deal to expand its market reach into new areas, such as server-attached and embedded storage, through established Engenio OEM relationships.