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McData Sweeps Up Nishan, Sanera

Placing a nearly $200 million bet on the future of storage networking technology, McData Corp. (Nasdaq: MCDTA) today announced that it plans to acquire Nishan Systems Inc., an IP storage networking startup, and Sanera Systems Inc., a high-scale SAN switch startup (see McData Buys Sanera, Nishan).

McData said it will acquire all outstanding shares of Nishan for $83 million in cash and will also assume approximately $2 million of the startup's debt -- well under the more than $100 million that Nishan's VCs had invested in the company (see Nishan Secures $10M Debt Financing).

Meanwhile, McData said it will acquire all outstanding shares of Sanera for approximately $102 million in cash, net of debt and cash on hand; that startup's investors had ponied up a total of $101 million to date (see Can $35M Save Sanera?).

In conjunction with the acquisitions, McData said it will provide between 1.5 million and 1.7 million shares of Class B common stock and about $8 million in cash over the next two years to fund "employee retention programs" for Nishan and Sanera employees. McData said these shares have been separately approved and will be amortized as deferred compensation.

"The powerful combination of Nishan and Sanera's advanced technologies with McData's strong leadership and expertise will allow us to provide customers with unprecedented value, choices, and solutions delivered seamlessly from a trusted and reputable partner," said John Kelley, McData's president and CEO, in a prepared statement. "McData is changing the future of storage networking."

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