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HP Acquires StorageApps

Hewlett-Packard Co. (NYSE: HWP) announced today that it will acquire StorageApps in a stock swap deal worth $350 million (see HP Scarfs Up StorageApps). The purpose of the deal appears to be for HP to plug a gap in its product line for virtualization technology.

Under the terms of the agreement, HP will acquire all of the capital stock of StorageApps for HP common stock. Completion of the transaction is subject to customary closing conditions and regulatory review. The deal is intended to be structured as a tax-free re-organization and accounted for as a purchase.

Upon completion, StorageApps and its 200 employees will remain in Bridgewater, N.J., but will become a wholly owned subsidiary of HP.

So whats in it for HP?

Basically, virtualization technology is the trend in the storage networking market right now. Roughly $270 million has already been poured into startups in this space (see Venture Capital Survey), and analysts are predicting that it will eventually be ubiquitous in storage networks. Yet, until this acquisition, HP had nothing to show in this department.