Storage Consolidation Continues: Emulex To Buy Vixel

Officials of Emulex, a Costa Mesa, Calif.-based developer of storage networking host bus adapters, said on Wednesday the company will acquire Bothell, Wash.-based Vixel, which supplies embedded switch ASICs and subsystems to storage networking OEMs.

Emulex will pay $10 cash per share for Vixel for a total of about $310 million. Subject to regulatory approvals and the will of the holders of a majority of Vixel shares, the deal is expected to close in November, said Mike Smith, executive vice president of worldwide marketing for Emulex.

The two companies have complementary product offerings, which was a big part of why Emulex was attracted to Vixel, said Smith.

Vixel represents a $450 million market for embedded storage switches by 2007, which is in addition to the $1.4 million to $1.5 million market expected for storage host bus adapters by then, Smith said. "Customers who utilize our HBA technology are also customers of embedded switch technology," he said. "This will give us more critical mass behind our silicon business."

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About 35 percent of Emulex's current revenue comes from the channel, said Smith. Vixel's focus is exclusively on the OEM business, and so he said the acquisition will have no affect on Emulex's channel business. Vixel brings 115 people and a growing revenue and customer base to Emulex, he said.

In addition to its embedded switch business, Vixel in the past also used to develop storage management software and Fibre Channel switches. However, it sold its SANView software to Fujitsu Softek in March of 2001, and has been gradually winding down its switch business, Smith said.