NetApp nabs SolidFire before all-flash array opportunities burn away

Contact: Scott Denne Tim Stammers

Making its most aggressive deal to date, NetApp pays $870m in cash for all-flash storage array (AFA) vendor SolidFire. NetApp’s major competitors long ago inked acquisitions to get into the AFA market, while NetApp took the unusual step of trying to develop a product internally – a project that saw only temporary and limited release of a device that was lacking several critical features.

The price tag shows that NetApp feels some urgency to fix that gap. We estimate that the market for AFAs will grow at a 36% CAGR between 2014 and 2019. NetApp typically prints about one transaction per year and has often bought sub-$10m revenue companies for high multiples. On an absolute basis, this is the biggest deal NetApp has done. In 2011, it spent $480m on LSI’s aging RAID storage business – a business that generated $700m in sales. SolidFire, by comparison, likely posted $50-100m in trailing revenue.

It appears that a bit of traction and patience has benefited SolidFire and its investors. Not only is this an unusually large acquisition for NetApp, the price tag is higher than any we’ve seen among AFA providers.

Past all-flash array M&A

Date announced Target Acquirer Deal value
December 21, 2015 SolidFire NetApp $870m
December 15, 2014 Skyera Western Digital Not disclosed
September 10, 2013 Whiptail Technologies Cisco Systems $415m
August 16, 2012 Texas Memory Systems IBM (see 451 estimate)
May 10, 2012 XtremIO EMC (see 451 estimate)

Source: 451 Research’s M&A KnowledgeBase

Look for a full report on this deal in tomorrow’s Market Insight Service.

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