Feeds

Mixed tape: Overland Storage buys Tandberg Data in CASH-FREE transaction

$42m price tag - but Overland's had to pay completely in stock

Maximizing your infrastructure through virtualization

Struggling tape and disk storage vendor Overland Storage is buying recovering tape systems vendor Tandberg Storage for $42m in stock to help boost its revenues.

Tandberg Data supplies tape and disk-based storage and data protection products to small and medium businesses. It has recently recovered from a bankruptcy experience in 2009, under the stewardship of Pat Clarke’s executive team, and has just about become profitable again.

Overland Storage has had a similarly difficult time of late, and has product overlap with its slurpee – although it also supplies scale-out filer and block-access storage arrays for on-premise and cloud storage for all types of data. It too has been trying to recover from a declining tape market, once the mainstay of its business, for many years – during which it has made continuous losses and its exec team has acted as financial Houdinis, escaping from one perilous financial situation after another.

Cyrus Capital, Tandberg’s owner and a major Overland investor, has been pushing for a merger or acquisition between the two for some months.

Eric Kelly, Overland’s president and CEO, said:

The Overland and Tandberg combination will accelerate our strategy of becoming a global leader in the data management and data protection industry. With more than $100 million in annual revenue for the combined company during the last fiscal year, we expect the combination of these two businesses to provide us with a clearer path to profitability. The combined company will offer one of the broadest product lines and service offerings in the enterprise storage marketplace, and have the resources necessary to expand our market presence, fuel our growth and deliver innovative products and cloud offerings in the future.

The combination of Overland and Tandberg will expand our geographical reach in Europe , Asia and the Middle East, as well as strengthen the research and development team. It will also enable us to leverage the world-class manufacturing facility in China.

Tandberg Data CEO Pat Clarke said: “We look forward to joining forces with Overland and are excited to combine our substantial resources to create a stable platform for profitability, enabling greater focus on accelerating revenue growth. Together we will be able to support our customers globally with over 16,000 channel and service partners."

Some details:

  • It is a 100 per cent stock transaction.
  • Cyrus Capital, the owner of Tandberg Data, and other convertible debt-holders will convert approximately 81 per cent of their currently outstanding convertible debt into shares of Overland common stock at a price of $1.30 per share.
  • Eric Kelly will continue to serve as president and CEO of the combined company. Kurt Kalbfleisch will continue to serve as CFO and Randy Gast of Overland will serve in newly created position of COO.
  • Overland's board of directors will be expanded to seven directors, of which five will be current board members. The other two will be new board members appointed by Cyrus Capital.

Tandberg is the larger company in terms of product revenues. There will be Tandberg executive representation in the combined company, on the sales side for example, but Clarke himself will gradually exit. He said the two companies, by combining, would have more firepower and scale, and virtually no debt. Together the new organisation has a much better set of possibilities for growing, perhaps with an acquisition or two in the future.

Clarke said it will be all down to execution, noting, “The plan looks good.”

The acquisition is expected to complete by the end of the year. Read the PDF of the relevant SEC 8-K filing here. ®

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
Carbon tax repeal won't see data centre operators cut prices
Rackspace says electricity isn't a major cost, Equinix promises 'no levy'
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.