EMC To Buy Data Storage Firm Isilon For $2.25 Billion

EMC Corp plans to buy smaller rival Isilon Systems Inc for $2.25 billion as consolidation in the technology sector gains steam.

Large, cash-rich technology companies like EMC are buying up smaller rivals as they position themselves for an economic recovery.

“You want to buy companies when times are good. The fundamentals are very strong right now,” said Kaushik Roy, an Analyst with Wedbush Securities. “On top of that, you better strike before competitors strike.”

Data storage companies have been among the hottest targets in the recent round of consolidation as they play a crucial role in “cloud computing” – the use of technology to access remote computing power and data over the Internet.

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“The unmistakable waves of cloud computing and ‘Big Data’ are upon us,” EMC Chief Executive Joe Tucci said in a statement. “Customers are looking for new ways to store, protect, secure and add intelligence to the vast amounts of information they will accumulate over the next decade.”
EMC, International Business Machines Corp, Hewlett-Packard Co, Dell Inc and Oracle Corp are jostling for dominance in the storage market.

Jefferies & Co analyst Bill Choi expects consolidation to continue in the sector. He cited Compellent Technologies Inc, CommVault Systems Inc and NetApp Inc as potential targets. Activist investors are pushing Symantec Corp to consider strategic options, including a spinoff of its storage management software business.

Isilon sells so-called mid-range storage equipment that is easy to configure, an area in which EMC needs to improve its portfolio, Choi said. That would help it better compete with NetApp, the leader in that segment of the market, he added.

“This is going to be a key battle for next year,” Choi said.

The Isilon deal is expected to close late this year.