Adaptec Adopts Eurologic

Buys ailing subsystem maker for $30M. Can Adaptec get a SAN storage array business going?

April 1, 2003

2 Min Read
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Adaptec Inc. (Nasdaq: ADPT) has acquired storage subsystem manufacturer Eurologic Systems for $30 million in cash, increasing its SAN storage portfolio (see Adaptec Buys Eurologic for $30M).

Adaptec says it expects Eurologic to contribute between $60 million and $70 million in revenue during Adaptec's next fiscal year (which starts April 1) and to provide a "positive impact on bottom-line results" by mid-2002. Byte and Switch reported that Adaptec was in acquisition talks with Eurologic last week (see Adaptec to Buy Eurologic?).

Tim Connolly, director of Adaptec's external storage division, says Eurologic is "a natural fit" that will expand Adaptec's RAID controller franchise into networked storage.

"With Eurologic, we're gaining a revenue stream, a customer base, and a technology base," he says. "These are people who have been working in this business since 1988... They bring a strong base of sales, engineering, and marketing talent to Adaptec."

Adaptec, which expects the acquisition to be completed in April 2003, plans to incorporate Eurologic into its Storage Solutions Group and will assume all of Eurologic's customer and supplier agreements. Some of Eurologic's existing customers and resellers include Acer Inc., Bell Microproducts (Nasdaq: BELM), Fujitsu Siemens Computers, Intel Corp. (Nasdaq: INTC), Stratus Technologies International, and Tech Data Corp. (Nasdaq: TECD).Eurologic's family of external and networked storage products include JBOD (just a bunch of disks) and RAID SCSI enclosures, as well as Fibre Channel and Serial ATA disk systems.

But it remains an open question whether Adaptec can parlay Eurologic -- which has been struggling over the past year -- into a major new area of business. Analysts note that Adaptec's DuraStor RAID external storage product family has not turned into the high-growth business executives had predicted.

Connolly says that, initially, Adaptec's focus will be to maintain Eurologic's existing customer base. By the end of 2003, he says, the company expects to have developed a product that combines Adaptec's RAID technology, Eurologic's hardware, and the storage management software of bankrupt NAS vendor Tricord Systems, which Adaptec bought last November. [Ed. note: Yeah, that sounds like it should work just great.] (See Adaptec Scrapes Up Tricord and Adaptec Acquires Tricord Assets.)

Eurologic is based in Dublin, Ireland, with U.S. offices in Boxborough, Mass., and Colorado Springs, Colo. Most of the company's approximately 150 employees are expected to join Adaptec. Last fall, Eurologic had a headcount of 235 (see Eurologic Pares Headcount).

Prior to the Adaptec deal, Eurologic divested its 25-member iSCSI software business into a separate entity, Elipsan, based in Bristol, U.K., which will continue to operate independently. Elipsan develops storage management software for IP SANs geared toward the reseller channel. Eurologic spun it off in the last month because its business model diverged from the rest of the company, says Mike Stolz, Eurologic's VP of sales and marketing.Todd Spangler, US Editor, Byte and Switch

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