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Quantum plans to acquire Advanced Digital Information Corp. (ADIC) for about $770 million.
With the acquisition, unveiled Tuesday, Quantum would become the third-largest tape automation vendor after Sun Microsystems and IBM, according to research firm Freeman Reports. San Jose, Calif.-based Quantum said it expects the transaction to close in three or four months.
The deal is the latest acquisition Quantum has made in the tape industry. In October 2004, Quantum acquired Certance, a maker of LTO tape drives that competed directly with Quantum's DLT-format tape drives, making Quantum a manufacturer of both formats. And two years earlier, Quantum expanded its entry-level tape drive and library business with the acquisition of Benchmark Storage Innovations.
In the wake of those acquisitions, Quantum had to overcome development and operations issues, said Rob Pickell, vice president of marketing for the vendor. "In the last 12 months, we've put in place a single development team and rationalized our product lines," he said. "ADIC lets us continue to be a significant player in tape and better work with the broader storage market."
ADIC has had to deal with some acquisition-related issues of its own. Last fall, the Redmond, Wash.-based company launched a hostile bid to acquire Overland Storage but was thwarted, despite Overland's pending loss of major OEM customer Hewlett-Packard. Currently, ADIC is in the process of acquiring Rocksoft, a developer of software that eliminates redundant data for more efficient use of storage capacity.
Greg Knieriemen, vice president of marketing at Chi, a Cleveland-based solution provider that partners with Quantum, ADIC, and Overland in the tape library space, called Quantum’s acquisition of ADIC great news for the industry.
"There is some consolidation that needs to take place," Knieriemen said. "But my friends at Overland aren't going to be tickled to hear that."
The markets for data storage tape and data protection have continued to consolidate. Quantum's acquisition of ADIC comes about a year after Sun became the largest tape-library vendor with its acquisition of StorageTek.
Quantum has traditionally done well in the channel and OEM storage business, but not as well in the enterprise tape library business, Pickell said. ADIC, on the other hand, has sharpened its focus on the enterprise in the past few years, making the companies' product lines complementary, he said.
Though there’s some product overlap, Quantum and ADIC are in the early part of their product life cycles, Pickell said. As a result, Quantum will try to keep both product lines in different market segments, similar to the way it segmented the market when it purchased Benchmark. "Doing it that way, we were able to achieve more than if we promote the acquisition as a cost-cutting measure," he said.
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