ADIC acquires storage networking pioneer Pathlight Technology
REDMOND, Wash.--(BUSINESS WIRE)--Advanced Digital Information Corporation, one of the world's leading independent storage solutions providers, today announced a definitive agreement to acquire privately-held Pathlight Technology, Inc.
Based in Ithaca, New York, Pathlight has been pioneering the technologies that enable networking of critical storage resources since 1994. The merged companies will offer a broad range of intelligent storage products including SAN management, connectivity, and virtualization products that complement ADIC's existing storage hardware and software solutions.
Following completion of the transaction, Pathlight Co-Founder and Executive Vice President Said Rahmani will become Executive Vice President of Research and Development at ADIC.
The agreement announced today calls for ADIC to exchange 10.3 million shares of common stock for all of the outstanding stock, warrants and stock options of Pathlight in a merger intended to be accounted for as a pooling-of-interests.
Based upon ADIC's closing price on January 29, the transaction has a current aggregate value of approximately $265 million. ADIC expects to report one-time acquisition costs of approximately $10-12 million during its second quarter ending April 30, 2001. Directors of both companies have approved the merger, and approximately 75% of the Pathlight shares have agreed to vote in favor of it. ADIC shareholder approval is not required.
"The acquisition of Pathlight further confirms ADIC's long-held strategy to offer intelligent, open and device-independent storage solutions for our customers," said Peter van Oppen, Chairman and CEO of ADIC. "Pathlight saw early on that protocol-aware technology addressed not only the SCSI-to-Fibre interface question but offered a direct path to any-to-any connectivity, resource virtualization and storage network management."
Said Rahmani, Co-Founder and Executive Vice President of Pathlight, said "Pathlight has OEM or reseller agreements in place with many of the most important storage vendors. Merging with ADIC offers us a chance to rapidly build a branded business through ADIC's proven sales and marketing Team as well as an opportunity to integrate our technology with ADIC's growing range of storage products."
ADIC President and Chief Operating Officer Chuck Stonecipher noted, "Our combined companies have excellent relationships with companies such as IBM, Dell, EMC, Fujitsu-Siemens, McData, Unisys and others. We hope to be able to offer our OEM partners, reseller channels and end-user customers an ever greater portion of their intelligent storage solutions."
Pathlight had revenues of approximately $20 million for the twelve months ended October 31, 2000 and pre-tax earnings of approximately $5 million. Both Pathlight and ADIC are expected to grow revenues in the range of forty percent or more for fiscal 2001.
ADIC also announced that it expects to increase various expenses including research and development during fiscal 2001 as a result of the merger which may result in reducing earnings per share by as much as ten percent this year. It is anticipated that the merger will contribute significantly to revenue, net income and earnings per share in 2002.
The merger agreement provides for two escrow arrangements pursuant to which a total of 1,287,500 shares out of the total of 10,300,000 shares will be held in escrow pending satisfaction of certain potential liabilities or adjustments defined in the agreement. The merger is expected close during ADIC's second quarter following registration of the shares issuable in the merger with the SEC and satisfaction of other closing conditions.
Separately, ADIC also announced that it was terminating its stock repurchase program, previously announced on August 17, 2000, in order to facilitate accounting for the Pathlight merger as a pooling-of-interests transaction.
About ADIC
With more than 75,000 automated tape libraries installed, innovative storage management software, Fibre Channel Storage Area Network (SAN) solutions, and Network Attach Storage (NAS) appliances, ADIC is the world's leading device-independent storage solutions provider to the open systems marketplace.
The Company offers a broad range of products designed to help organizations stay more productive by making it easier for them to store, protect, manage and use their rapidly growing network data. ADIC's industry-leading line of automated storage products are available through a worldwide sales force and a global network of resellers and OEM partners, including Dell, IBM and Fujitsu Siemens. Further information about ADIC is available at www.adic.com.
About Pathlight
Pathlight's SAN Gateway and SAN Router are high-speed, high-reliability storage networking solutions that each deliver a complete infrastructure in a single device including connectivity via multiple Fibre Channel ports and SCSI shannels, open systems interoperability, and simultaneous support for heterogeneous host and device connections, operating systems and storage system interfaces.
Both feature flexible scalability and support for value-add functions such as server-free backup and enterprise management applications. SAN Gateway and SAN Router also support exclusive technologies including Pathlight's Virtual Private SAN(VPS) and Virtual Private Map(VPM) -- powerful access security control solutions that provide protected connections between multiple heterogeneous hosts and multiple heterogeneous storage devices for reliable resource sharing.
Pathlight's SAN Director software is a comprehensive JAVA-based management solution that provides system administrators with a single point of control, remote or local, to maintain, monitor and configure the entire storage network from end-to-end. Further information about Pathlight is available at www.pathlight.com.