Quest gets some Bakbone for $55m
Upright data protection
When announcing these results, Martin said: "Our first quarter bookings reflect strong demand from Asia, especially Japan, offset by reduced bookings in Europe and North America as compared to the prior year. Japan was especially strong for BakBone. During the recent quarter, we received a commitment for approximately $2 million from a large financial services company in Japan. Approximately 25 per cent of the order is included in our bookings for the first fiscal quarter with the remaining amounts expected over future quarters including the next fiscal year.
"We continue to move aggressively toward an enhanced channel-centric sales model in our North American operations, similar to the one we use for our successful sales efforts in Japan. We are working closely with our resellers and distributors to drive additional sales of our NetVault storage offerings in the marketplace. … For the remainder of fiscal 2011, we will be focused on strengthening our channel-centric sales model and on expanding our presence in the growing markets of the Asia-Pacific region, while maintaining good control of operating expenses. We remain committed to increasing revenues and improving profitability."
This picture was all too clear to investors. They were looking at a share price of $0.45 in January this year and 0.16 on Monday November 8th, following a low point of $0.12 in September. Now, with the acquisition news out there, the shares are $0.315. Recent buyers will be well pleased.
VantagePoint Venture Partners, a venture capital company, owns a chunk of BakBone's Series A Preferred Shares and has two directors on Bakbone's board. These two may have been driving events, especially as preferred shareholders get $1.29 a share instead of the $0.33 the common shareholders get in the acquisition.
Contracting but a working company in there
Bakbone has been contracting its business, backtracking from messaging and finding its OEM business shrinking. It does not have must-have, leading technology in any data protection area. What it does have are 130-plus loyal employees and many, many customers around the globe.
Vanessa Gamlin, its world-wide director of field marketing, said immediately before news of the acquisition broke: "BakBone’s financial position remains strong and we are generating positive cash flows. We are working on new technologies and developing new products and have a solid customer base worldwide." That's what made it a good purchase for Quest Software.
Doug Garn, CEO and president of Quest Software, said: "Our respective products are highly complementary, with minimal overlap. The value received from BakBone's employees, technologies, partners and customers is expected to be a key benefit as we seek to expand our market share in the data protection market by building upon our core portfolio."
Martin said: "We are pleased that we have been able to enter into this definitive agreement on behalf of BakBone's shareholders." You bet; those shareholders owe Martin a great debt of thanks. It doesn't look too much like a distress sale but it must have been pretty close.
The deal is expected to close in the first quarter of 2011. Hopefully the majority of jobs at Bakbone will be safe, although there have to be the traditional back-office area rationalisations and maybe some sales overlaps to sort out. The engineers should have fun converging the two base technologies. One job casualty might be Martin himself; two CEOs being one too many. ®
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