Sun scoops up StorageTek for $4.1bn

Sun Microsystems, looking to add market clout, is acquiring storage specialist StorageTek in a deal worth $4.1bn, the companies said on Thursday.

The deal will give Sun a greatly expanded storage product line, additional sales channels, and a larger sales force and partner network, company executives said.

Sun will pay $37 per share for each share of StorageTek, an 18 per cent premium on the stock based on Wednesday's closing price of $31.23. Sun said the deal should boost its bottom line within 12 months of closing, which it expects to happen in late summer or early autumn.

Sun CEO Scott McNealy said the combination of two companies' gear will make Sun one of the largest providers of "information lifecycle management" products, which combine hardware and software for creating, storing and archiving corporate data.

"As we looked at the total $65bn available market for storage and things like Sarbanes-Oxley and HIPPA and other regulatory compliance issues, [we saw that] storage, data management and managing critical data assets of companies [were] becoming a more and more important component of solving complex network computing problem," McNealy said. "We're very interested in the storage business but this combination here takes us to new level of scale and scope on global basis."

Sun and StorageTek's storage product lines will be merged and sold by a combined sales force, executives said. StorageTek, which employs about 7,100 people, will mix into Sun's storage organisation under Mark Canepa, executive vice president of Sun's storage products.

McNealy said the addition of StorageTek will boost Sun's revenue, profit and ability to generate cash. Through the all-cash transaction, Sun will gain StorageTek's $1.1bn cash reserves.

Sun executives said that the StorageTek deal is part of an ongoing process to fill out the company's product line, and indicated that more acquisitions could be forthcoming. Sun recently bought storage assets from Procom Technology.

Jonathan Schwartz, Sun's chief operating officer, said: "We will be a consolidator in the industry. This represents a holistic platform strategy."

The combined company will have tools to build business applications, the servers to run them and now a broad storage product set to store and archive corporate data, executives said. Sun also intends to use its identity management server software to provide secure access to data.

Margaret Kane writes for CNET News.com