SanDisk To Acquire Fusion-io, Become Enterprise Flash Storage Provider

Flash storage technology developer SanDisk is planning to acquire Fusion-io, a move that will give SanDisk a strong flash-based PCIe hardware and software portfolio and will help speed up the continuing consolidation in the flash storage industry.

Milpitas, Calif.-based SanDisk will pay about $1.1 billion, after accounting, for Salt Lake City-based Fusion-io's cash on hand, in an all-cash transaction that values Fusion-io at $11.25 per share, or about 13 percent from its Friday close of $9.29 a share.

With the acquisition, SanDisk solidifies its position as a major consolidator in the flash storage market. In particular, SanDisk gets access to both Fusion-io's ioControl hybrid flash and disk array and its ION Accelerator all-flash appliance for application acceleration.

[Related: SanDisk, Diablo Intro ULLtraDIMM Flash Storage, Claims Performance Better Than PCIe]

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One of SanDisk's primary goals has been to grow its high-value solutions, especially those related to high-end enterprise applications, said Sanjay Mehrotra, SanDisk president and CEO, during a Monday conference call announcing the acquisition.

"This acquisition is an important step in the evolution of SanDisk into an enterprise storage solutions provider," Mehrotra said. "With the addition of Fusion-io's PCIe hardware and software solutions, SanDisk will have the broadest flash solution portfolio in the industry."

Acquisitions have been a big part of growing SanDisk's enterprise business.

SanDisk in 2013 acquired Smart Storage Systems, a developer of enterprise-class SATA and SAS SSDs.

The company in 2012 acquired Schooner Information Technology, a developer of enterprise applications that provide availability and caching features for database applications. It was a follow-up to SanDisk's acquisition earlier that year of FlashSoft, a developer of software for adding SSD caching capabilities to software applications.

SanDisk, which was founded as a Flash memory technology developer, started its enterprise journey with its May 2011 acquisition of SSD maker Pliant Technology.

Once its acquisition of Fusion-io closes later this year, SanDisk will get a number of Fusion-io PCIe and flash storage technologies.

Fusion-io in 2013 acquired NexGen, a developer of hybrid storage appliances based on Fusion ioMemory for small to midsize enterprises. NexGen's software, combined with ioMemory and standard disk drives, turns industry-leading x86 server platforms into hybrid disk and flash storage systems.

Fusion-io in 2011 acquired IO Turbine, a developer of caching solutions for virtualized environments, for about $95 million. IO Turbine developed software that takes advantage of SSD and Flash storage on servers to increase the performance of primary storage in virtualized server environments.

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Financially, the pending disappearance of Fusion-io is bad news for investors who participated in the company's June 2011 IPO when it opened at $24 per share, and rose to as high as $39.60 later that fall only to continually slide since then.

However, it is actually great news for the storage industry and the channel, said Dave Cerniglia, president of Consiliant Technologies, an Irvine, Calif.-based solution provider and Fusion-io channel partner.

"Any time a company like Fusion-io with innovative technology grabs hold in the marketplace, an acquisition like this validates that technology," Cerniglia told CRN. "And Fusion-ion gets a cash infusion from a larger company to expand development."

The consolidation going on in the flash storage business, including SanDisk's planned acquisition of Fusion-io, is part of a common evolution in which a small company goes to market with innovative technology and either gets validation of that technology or not, Cerniglia said.

"Now a larger company is coming in and saying, 'We'll take over now,'" he said. "This consolidation is very healthy. It's normal. And it's a good thing. Now we can see what's coming that's new. Innovation is what keeps us going."

Tony Balistrieri, western regional president at MCPc, a Cleveland-based solution provider and Fusion-io partner, said that Fusion-io has a good product line combined with a great sales organization.

"It was one of the first companies to push enterprise SSDs," Balistrieri told CRN. "Others talked about it. But Fusion-io was the first to come out with it."

Flash storage, like memory and disk drives before it, is becoming a commodity product and pushing the industry to consolidate, Balistrieri said.

"The whole market will go through similar changes, with bigger guys buying smaller companies," he said. "We're seeing it in the storage and networking and other markets. This helps not only grow the revenue of the acquiring companies, but also helps get new technology spread to the market."

Not everyone is happy with the acquisition. Andrews & Springer, a Wilmington, Del.-based law firm specializing in working with shareholders, on Monday said in a statement it is "investigating whether Fusion-io directors are breaching their fiduciary duties by failing to adequately shop the company and maximize shareholder value."