Hostile takeover looming for Overland

Hostile takeover looming Overland

Oct 13, 2005: Contrary to earlier statements, in an SEC filing on Tuesday ADIC outlined its intention to acquire storage manufacturer Overland.

ADIC manufactures disk based backup arrays, storage management software and midrange tape automation products. By comparison, Overland handles the small to medium business market for tape automation and disk based backup appliances.

Overland is yet to make a statement, however ADIC said in an open letter to Overland executives:

"We continue to believe that a combination of ADIC and Overland would be of significant benefit to our respective shareholders: said Peter van Oppen, ADIC's chairman and ceo. "Accordingly, ADIC is prepared to offer to acquire all of the outstanding shares of Overland common stock."

Van Oppen's comments are a marked departure from the last statement ADIC made when it acquired 9% of Overland shares in August. All that was said then was that it has previously invested in storage partners and competitors, including StorageTek and Quantum.

Some are confused about the bid, as whilst the acquisition looks to improve ADIC's market coverage by giving them a broader range of products and customers, their sales systems are significantly different. Overland makes over half of its sales through channel partners and the rest from OEM deals whereas ADIC works with both direct and indirect sales.

"They'd be picking up the low-end tape and disk products, and Zetta," said Mike Fanelli, SSI hubcity's western regional manager "But that seems to be pretty expensive. Maybe Overland is better at the SMB space than ADIC, which gets Overland's customers when buying the company."

The fact that Overland doesn't do direct sales is something that works in its favour with many of its channel partners, the ADIC acquisition however is putting a big question mark above whether or not this will continue.

ADIC haven't as yet outlined the full extent of their intentions, but they may be able to have their cake and eat it too. "If ADIC were to preserve the Overland channel programs, possibly keep it as a separate division, and keep their channel partners - they have good partners - and their programs, then ADIC can both work with the channel and preserve their direct sales force." Said John Zammett, president of solution provider HorizonTek.

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