EMC to buy Legato
EMC to buy Legato
It seems that storage systems EMC has taken to the current climate of acquisition in the IT sector in a big way, after announcing it is to buy storage software vendor Legato Systems in a deal worth US$1.3 billion (AUD$1.9 billion), just a week after announcing the purchase of BMC Software.
Unlike Oracle's hostile takeover bid for PeopleSoft, the move has been warmly welcomed by Legato. Legato's chairman and CEO, David B. Wright said it was a terrific move and one that would benefit everyone connected with the company.
"Legato's current shareholders, employees, customers, and partners will see tremendous benefits from EMC's extensive R&D resources, expertise in networked storage, global distribution and customer reach, and overall financial strength. We will now have additional resources to further accelerate the development and delivery of solutions to the market in order to fulfil our mission of delivering the software and services that protect and manage customer's information, assure the availability of their applications and provide immediate access to business-critical information."
Under the terms of the agreement, Legato stockholders will receive 0.9 of a share of EMC common stock for each share of Legato common stock. Based upon the EMC closing stock price of $11.74 on July 7, 2003, the transaction is valued at approximately US$1.3 billion.
Joe Tucci, EMC's president and CEO, said that Legato's software helped fill the missing pieces in EMC's offering.
"This combination is all about improving the access, management and protection of an organisation's core asset – information – through its complete lifecycle. We're combining best-of-breed storage technology, two winning employee populations with similar reputations for customer focus, and two experienced management teams with highly complementary visions for the future of information management. This represents a significant win for both companies' customers, employees, partners and stockholders."
Tucci added that EMC expects to make a further acquisition by the end of next year, as it attempts to compete with the likes of HP and IBM, but stressed that an acquisition boom was unlikely.
"I don't think we're going to see an explosion of IT spending, but I do think we're going to see a slow but sure loosening up of the pocketbooks."
Upon completion of the acquisition, Legato will operate as a division of EMC.
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