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NetApp (NTAP) Inks Definitive Agreement to Buy SolidFire

Storage and data management solutions provider NetApp Inc.NTAP signed a definitive deal to acquire SolidFire Inc. in an all-cash transaction. The deal value was disclosed at $870 million. NetApp expects the deal to be wrapped up in the fourth quarter of fiscal 2016. The completion of the buyout offer is subject to fulfillment of customary closing conditions.

Founded in 2010, SolidFire is a global leader in flash storage systems for faster access to insights from Big Data. The company received funding from a number of venture capitalists including New Enterprise Associates, Valhalla Partners and Samsung. SolidFire's unique products are built specially to assure true Quality of Service (QoS) and have garnered significant attention in the flash storage market in recent times.

According to George Kurian, chief executive officer of NetApp " We look forward to extending NetApp's flash leadership with the SolidFire team, products and partner ecosystem, and to accelerating flash adoption through NetApp's large partner and customer base."

SolidFire all-flash storage systems will largely complement NetApp's product suite. The acquisition will extend NetApp's flash leadership position, which in turn will allow NetApp's customers to analyze fast-growing storage infrastructure.

As data explosion continues with higher adoption of cloud computing and big data, flash storage has been touted as the best solution to take care of the demand for higher speed and performance at the same cost as disk arrays. SolidFire specializes in developing all-Flash storage arrays, a much sought-after technology for traditional storage companies such as EMC Corp. EMC and International Business Machines Corporation IBM .

SolidFire's flash storage arrays, instead of focusing on improving cache performance, act as primary storage for applications requiring high speed, such as in cloud computing and virtualization. This simplifies the storage system while decreasing fetching time, thereby increasing speed. Further, SolidFire's flash arrays are built on Next Generation Data Centers that simplify data center operations and enable rapid deployments of new applications. These features make it more cost effective in our view.

NetApp has a dominant position in the flash storage market. According to a Bloomberg report, NetApp's flash storage sales amounted to approximately $100 million in 2014. The acquisition is expected to boost NetApp's flash based storage product portfolio going forward. We believe that the acquisition will expand NetApp's customer base and market share due to higher demand from enterprises going forward.

Moreover, we believe that the acquisition will provide NetApp a significant competitive edge in the storage market where it faces significant competition from its peers. However, soft demand from U.S. federal agencies and constricted IT spending in general remain headwinds.

NetApp currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the technology sector is Amazon.com Inc. AMZN , carrying a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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