Contact: Tim Stammers
To bolster its enterprise business, flash giant SanDisk is acquiring enterprise flash drive specialist SMART Storage Systems for $307m in cash. SanDisk first entered the market for enterprise flash drives in 2011, with the purchase of SSD maker Pliant Technology for $327m. The pickup of SMART Storage should increase SanDisk’s SSD sales and bring the company revenue and OEM relationships, as well as intellectual property.
SMART Storage Systems generated sales of $25m for the quarter ended May 31, 2013. SanDisk indicated that the company was on a rapid growth trajectory. At a revenue run rate of $100m, the $307m price may seem low for a company that is growing quickly, owns competitive technology, and is operating in a fast-growing market. However, the company is operating in a very competitive sector that is heading for commodification, and as a result its prospects as a small, independent supplier are tentative at best.
We do not believe that the deal will significantly alter the landscape of the SSD market. Currently, that market is small and growing, but it is also crowded. This deal will, however, bring SanDisk increased visibility in the enterprise sector, as well as access to technology that it will be able to incorporate into its future products. For a full report on the transaction, subscribers can click here.
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