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Sources: McData to Buy Sanera

Mickey D is said to be negotiating to buy the high-end SAN switch startup for around $175M

High-end SAN switch startup Sanera Systems Inc. is in "final negotiations" to be acquired by McData Corp. (Nasdaq: MCDTA), sources close to McData tell Byte and Switch.

Sources say the price is somewhere around $175 million -- "or a little less" -- comprising cash and stock. Sanera, founded in August 2000, has raised $65.3 million to date from investors that include CMEA Ventures, Storm Ventures, Enterprise Partners Venture Capital, Greylock, Acorn Ventures, ETrade, and Goldman Sachs & Co. (see Sanera Turns On the Juice).

A McData spokesman declined to comment, and Sanera representatives did not respond to requests.

McData does have the cash to pull off a deal of this size: As of December 31, 2002, the company reported having $230 million in cash and short-term investments. And in February, the company raised $172.5 million through convertible subordinated notes, which it said it would use for "potential acquisitions," among other things (see McData, Emulex Rake It In and McData Raises $172.5M From Notes).

Would this be a smart deal for McData? Analysts say it would give the Fibre Channel switch vendor a clear leg up over Cisco Systems Inc. (Nasdaq: CSCO), just as Cisco starts to roll into the market (see EMC, Cisco Do the Deed and Cisco Gets Set).

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