Imation Corp. (NYSE:IMN), a storage and data security giant, has acquired California-based-data-storage provider Nexsan, for about $120 million, with $105 million cash and the remainder in stock, making this the first acquisition of the enterprise storage for the new year.
This acquisition deal by the data security giant has been struck in a move to rebuild its business around more high growth areas, after the company faced a declining pattern in the revenues generating from all of its lines of business. The company believes that this deal is going compensate for the series of losses and annual declines faced by the Oakdale, Minnesota- based company in the past 4 years.
“We are excited to have Nexsan become part of Imation,” said Philip Black, CEO of Nexsan. “Imation provides us the scale and global footprint to expand our business, while still keeping intact our award winning partner program, our strong management team and employees, and our innovative products and roadmap. We look forward to working as part of Imation to deliver compelling solutions that meet the growing storage, archive and compliance requirements of businesses worldwide. This is good news for Nexsan channel partners, employees and customers.”
Competing against big guns like EMC and HP, Nexsan generated revenues of $82 million with margins of over 40% on its products in 2011. The California based startup has around 200 employees, based in the U.S., U.K. and Canada, who will join Imation's existing team subsequent to this acquisition.
“Nexsan’s management team has grown this business from startup to more than $80 million, with strong gross margins,” Imation Chief Executive Officer Mark Lucas said in the statement.
This deal is expected to accelerate Imation Corp. (NYSE:IMN)'s growth in the small and medium sized business and enterprise storage markets with more than 11000 existing customers worldwide.
“Imation’s acquisition of Nexsan is an exciting next step in our strategic transformation, which includes investing in growth platforms in data storage and security solutions, where we are targeting markets with strong growth rates,” said Mark Lucas, president and CEO of Imation.
In its third quarter of last year, the company reported that its revenues stood at a total of $248.2 million, after declining 19.6% from its Q3 earnings in 2011.
Subsequent to this acquisition, Nexsan will continue to operate from its headquarters in Thousand Oaks, California, under its existing management.
Shares of Imation Corp. (NYSE:IMN) closed at $4.67 on the New York Stock Exchange on Monday.