Legato to Buy OTG in $403 Million Deal

With this merger, OTG Software is a division of Legato Systems, which now becomes a company of 1,800 employees worldwide. OTG is expected to stay in its headquarters in Rockville, Md., its research and development facility in Silicon Valley as well as its locations in Andover, Mass. and Nashua, N.H.

OTG CEO and president Richard Kay will become part of the Legato's board of directors. He will also stay on as president of Legato's OTG division.

"This gives OTG a chance to scale as a company," says Kay. "And it is a really powerful fit because Legato provides enterprise storage backup and recovery and OTG provides data access on the front-end through applications and e-mail management solutions."

About 85 percent of OTG's revenues are based on indirect sales, Kay says. And the average OTG customer makes between $10 million and $500 million in revenues. The company's current sales model is not expected to change.

"We will continue with that model," says Kay. "This is the beauty of the this deal, nothing changes. Legato sells largely enterprise deals. We sell midrange, departmental type deals that we will expand to the mid-market."

OTG provides storage management solutions via virtualization technology that expands primary and secondary storage onto different devices and media. Legato offers backup and recovery product for enterprise-level jobs. Kay says Legato has committed to using its flagship Disk Xtender Unix edition in place of its Networker product for Unix.

"Some of our products will be sold through their direct model and some of their solutions will be brought into our channel for a more comprehensive solution," says Kay.