NetApp Inc. (NASDAQ: NTAP) hit a new 52-week low on Tuesday following the announcement of an acquisition, which needless to say, has investors displeased. The company said that it entered into a definitive agreement to acquire SolidFire for $870 million in cash. SolidFire was founded in 2010 as an all-flash storage systems builder for the next-generation data center.
This acquisition is expected to be completed in NetApp’s fiscal fourth quarter. It is still subject to customary and regulatory conditions.
With this acquisition, NetApp will now have all-flash offerings that address each of the three largest All-Flash Array market segments.
Eventually, SolidFire products will be integrated into NetApp’s data fabric strategy, delivering data management across flash, disk and cloud resources. The SolidFire CEO, Dave Wright, will lead the SolidFire product line within NetApp’s product operations.
24/7 Wall St.George Kurian, CEO of NetApp, commented on the acquisition:
This acquisition will benefit current and future customers looking to gain the benefits of webscale cloud providers for their own data centers. SolidFire combines the performance and economics of all-flash storage with a webscale architecture that radically simplifies data center operations and enables rapid deployments of new applications. 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.
Dave Wright, chief executive officer at SolidFire, added:
Both SolidFire and NetApp have deep technical, customer-centric cultures, which are focused on delivering innovations that give customers a competitive advantage. We look forward to enhancing NetApp’s position within the all-flash array market while helping NetApp and SolidFire customers and partners succeed.
As 2015 is coming to a close, NetApp has underperformed the market, with the stock down 32% year to date.
Shares of NetApp were trading down 5% at $26.20 on Tuesday, with a consensus analyst price target of $32.65 and a 52-week trading range of $25.21 to $43.32.
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