IBM, Seagate Flash Their M&A Cash

IBM and Seagate have jumped further into the managed services market, snapping up, respectively, Arsenal Digital and MetaLINCS, for undisclosed fees today.

Data protection specialist Arsenal Digital is the latest in a string of services-related acquisitions from IBM, and follows the recent purchases of Novus CG and Softek.

Arsenal Digital's flagship product is its ViaBack solution, which is sold to service providers looking to back up their customers' data.

The Cary, N.C.-based firm, which claims that its solutions are sold to some of the world's largest telecom providers, will now form part of IBM's Business Continuity and Recovery Services (BCRS) products, according to Mike Riegel, IBM's vice president of information protection services.

"This is going to offer us a great capability to recover customers' data even faster," he said, adding that IBM is also keen to get its hands on Arsenal's customer list. "The first thing that attracted us to them was the customer base -- they have 3,400 customers across 60 data centers in 12 countries."Earlier this year Arsenal unveiled a set of services designed to ensure recovery of failed data within 72 hours, and the vendor also targets remote workers with its ViaRemote product.

"It's almost as if IBM Global Services is saying, 'We're not going to wait for products from within the company, we're going to get them externally if we need to,'" explains Dave Russell, research VP at analyst firm Gartner. IBM is now looking to extend its managed services offerings from Fortune 500 data centers to regional data centers and mobile workers, he says.

Although IBM is keeping tight-lipped on the value of the Arsenal deal, Russell thinks that it was probably more than the $185 million Seagate spent to acquire online backup specialist EVault last year.

"Somewhere around $225 million or $250 million would seem reasonable, but it's difficult to tell how the deal was structured," says the analyst.

IBM's Riegel told Byte and Switch that Arsenal Digital's 100 employees, including its management team and CEO Frank Brick, will be coming over to IBM when the deal closes, which is expected to be in the first quarter of 2008.Another vendor busting an M&A move today was Seagate, which also signed an agreement to acquire a privately-held firm in an attempt to flesh out its managed services strategy.

E-discovery software specialist MetaLINCS will eventually be built into the vendor's services portfolio, according to Carolyn Crandall, vice president of marketing for Seagate's services division.

"What MetaLINCS offers us predominantly is a software solution [but] our intent is to migrate it over so that it can be offered as a managed service as well," she says.

The vendor offers a suite of e-discovery software that can search and analyze corporate documents, including email and metadata. The San Jose, Calif.-based firm has racked up less than 25 customers for its products, according to Seagate, although these include big names such as Merrill Lynch, the Department of Justice, and Ernst & Young.

Seagate's Crandall would not reveal the value of today's deal, although she confirmed that it was not on a par with the $185 million EVault acquisition.The exec was more forthcoming on the subject of Seagate's integration plans for MetaLINCS, explaining that the startup's 50-strong workforce, including its management team, will be moving to Seagate. "Ramon Nunez, the MetaLINCS CEO, will be coming over and will run our e-discovery division," she says.

Robert W.Baird & Co. Analyst Daniel Renouard feels that the MetaLINCS deal is a shrewd move by Seagate. "The acquisition bolsters the Seagate Services Group and shows that the vendor remains committed to building on its backup and recovery and data protection/retrieval capabilities, which may prove a growth driver at some point," he wrote in a note earlier today.

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