VAR Datalink Acquires StraTech, Expands Eastern U.S. Footprint2:27 PM EST Fri. Oct. 05, 2012
Midrange data center infrastructure and services solution provider Datalink this week said it has acquired StraTech as a way to expand its geographical reach in the eastern and southeastern U.S.
Publicly-listed Datalink also lowered its third quarter 2012 guidance in the face of cautious customer spending and moves by customers to lengthen the time needed to sign contracts. The company expects revenue to grow and earnings to fall compared to the third quarter of 2011.
The acquisition of Cary, N.C.-based StraTech, formerly known as Strategic Technologies, brings Eden Prairie, Minn.-based Datalink over 400 new customers and about $65 million in annual product and services revenue.
Best of all, said Datalink President and CEO Paul Lidsky, StraTech brings his company a complimentary line of products and services and virtually no customer overlap.
StraTech's top three vendor partners include Symantec, Hitachi Data Systems and NetApp, the latter two of which are among Datalink's top partners as well, Lidsky said.
Like Datalink, StraTech also has an advanced support organization that handles support for its primary partners, as well as a managed services catalog similar to Datalink's with the addition of a number of new services, he said. "So if you add it all up, it's the kind of company we focus on with our acquisition strategy," he said.
Datalink purchased StraTech for about $13.2 million in cash and the issuance of nearly 270,000 shares of Datalink stock in return for assets worth about $16 million and the assumption of about $20.8 million in StraTech liabilities.
Datalink's acquisition strategy, which has been in place for several years, has Datalink making an acquisition about every 18 months focused on building out its geographical presence, Lidsky said.
Datalink's most recent prior acquisition was its October 2011 purchase of Minneapolis-based Midwave, which gave the company an expanded security practice and doubled its Cisco technology and services revenue.
With StraTech, Datalink gets an expanded presence in areas where it currently has operations including Atlanta, Boston, New York City, Philadelphia, Baltimore and Charlotte, N.C., Lidsky said. It also gets a new footprint in Ft. Lauderdale, Fla.; Nashville and Knoxville, Tenn.; Birmingham, Ala.; and Greenville, S.C., he said.
NEXT: StraTech Brings Growing, Profitable Business
StraTech is a profitable business, and has been growing about 10 percent to 15 percent a year, Datalink’s Lidsky said. However, that was not always the case. The company was founded in 2007 with the merger of Salt Lake City-based Consonus and Cary, N.C.-based Strategic Technologies, both of which were owned by holding companies.
Strategic Technologies, which used to have a strong Sun Microsystems hardware focus but in the past faced financial issues, was owned by holding firm Midas Medici Group Holdings.
"StraTech has always been a very credible competitor to us in the Southeast and Northeast," he said. "Over the past few years, it has built a strong, profitable business, which is the one we acquired."
With the acquisition, Datalink is getting StraTech's entire solutions, sales engineering and customer support personnel, as well as a number of the company's senior leadership, Lidsky said. However, since the acquisition is an asset purchase, personnel involved in general administration including in the finance, legal and IT areas, are staying with Midas Medici, he said.
Looking forward, Lidsky said Datalink is looking to Texas and the Ohio Valley for future expansion.
PUBLISHED OCT. 5, 2012