SANZ Set To Merge With Solunet

Executives of Castle Rock-based Storage Area Networks, a publicly listed solution provider trading over the counter under the name SANZ, late last month said the company has reached an agreement-in-principle to merge with Solunet.

Solunet does business as StorNet Solutions, an Englewood, Colo.-based storage solution provider. It is owned by Sun Capital Partners, a leveraged buyout company based in Boca Raton, Fla.

After the merger, Sun Capital is expected to hold a majority interest in SANZ.

The final agreement and terms are expected in the next few weeks, said Hugh O'Reilly, senior vice president of SANZ. Two key forces are driving the merger, O'Reilly said. The first is an expanded geographic footprint. Both companies are based in the Denver area, and SANZ has a presence in Arizona, Colorado, Connecticut, Massachusetts, New Jersey, Ohio and Washington, D.C. Solunet, meanwhile, has operations in California, Georgia, Ohio, Pennsylvania, Texas, Washington and Washington, D.C.

"We will now pretty much own the Northeast, from Virginia to New England," he said.

The second force is simple economics: By cutting back on administrative costs and improving purchasing capabilities, the combined company can be more efficient, O'Reilly said. The two also have a fairly good overlap in terms of technology partners, especially their respective reseller relationships with StorageTek, he said.

SANZ had yet to be profitable by the end of the third quarter of 2002, the last quarter for which it published results, O'Reilly said. "We have been trying hard to get to the break-even line. But the combination with Solunet will help drive economies of scale," he said.

Both SANZ and Solunet have long histories of growth by merger. In January 2002, SANZ finalized its acquisition of ITIS Services, a 26-person storage solution provider with operations in Connecticut and Boston. Solunet purchased StorNet in 2000, making it one of Sun Capital's holdings. Earlier in 2000, StorNet merged with Vangard Technology, an Englewood-based storage solution provider.