Converged networking and storage specialist Emulex will acquire network infrastructure visibility player Endace for about $130 million in cash, the two companies said Wednesday.
Endace, based in New Zealand and Sunnyvale, Calif., was founded in 2001 to attack the emerging market for packet capture and network recording. Its Endace Intelligent Network Recorders can capture, index and record 100 percent of network traffic while scaling from 1 Gbps to 100 Gbps in throughput, and its EndaceVision application allows users to retrieve, search or visualize network traffic from any Endace Recorder anywhere in a network. Endace's products run a proprietary operating system, OSm.
According to Emulex, Endace nearly doubles its total addressable market opportunity to $3.2 billion. Emulex's stated goal is to be the company that provides connectivity I/O assets at 10 Gb and higher while also providing visibility and monitoring capabilities for network functions at those speeds.
"Acquiring Endace aligns with our software-defined convergence strategy, doubles our total addressable market and places Emulex in another high-margin, high-growth market," Jim McCluney, Emulex's CEO, said in a statement.
Emulex's specialties include Fibre Channel host bus adapters, 10 Gb Ethernet Network interface cards, Ethernet-based converged network adapters, controllers, embedded bridges, switches and connectivity management software. It has extensive OEM agreements, including the likes of Cisco, Dell, EMC, Fujitsu, Hitachi, HP, Huawei, IBM, NEC, NetApp and Oracle. Based in Costa Mesa, Calif., Emulex reported $501.8 million in revenue for its fiscal 2012.
Emulex expects the transaction to be completed in its March quarter.
Shaun Walsh, Emulex senior vice president of marketing and corporate development, told CRN Wednesday that after the close, Endace CEO Mike Riley will report to Emulex President and COO Jeff Benck. He'll head a newly created network visibility product group within Emulex.
Apart from launching new products such as its 100 Gbps monitoring strategy, Endace has spent much of the year adding to its executive team and also revamping its channel strategy. Among the past year's hires were former Fortinet vice president Rob Atherton, now its vice president of corporate and business development, and former Juniper executive Spencer Greene, now senior vice president of product management and marketing.
In early October, Endace launched EndaceEDGE, a global channel program through which it made available its Network Recorders through VARs and integrators. It was a big step for the company, which in previous years had sold to Fortune 100 enterprises, telcos and government agencies directly. Its launch partners included major names like FishNet Security and Accuvant.
"Last fiscal year, Endace grew channel revenues from 20 percent to 40 percent of revenue," Emulex's Walsh said. "Mike Riley has stated that his goal is to continue growing the channel going forward to expand the geographic footprint, scale the company's sales and address key verticals. Emulex plans to fully support this plan as well.
Converged networking companies are expected to be catalysts for lots more M&A activity in and related to the software-defined networking (SDN) trend, of which Emulex has been a vocal advocate.
Earlier this year, VMware acquired data center startup Nicira, and networking startups Big Switch Networks, Embrane, Adara and Plexxi are all considered acquisition targets. Endace, for its part, recently joined Big Switch's partner ecosystem.
PUBLISHED DEC. 5, 2012