McDATA Corporation announced definitive agreements to acquire Nishan Systems, a privately held company and a supplier of native IP storage networking solutions; and Sanera Systems, a privately held company and provider of highly scalable and reliable enterprise storage networking solutions.

Separately, McDATA announced today that it has entered into an agreement with Aarohi Communications to provide technology for McDATA's intelligent switch platforms. These transactions deliver key capabilities in scalability, internetworking, and intelligence that strengthen McDATA's leading portfolio of multi-capable storage networking solutions.

With these three announcements, McDATA:

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  • Creates unprecedented value to its customers by providing seamless best- of-breed solutions;
  • Accelerates and solidifies its leadership and vision of a real-time storage services infrastructure;
  • Establishes a foundation for growth and leadership.
  • McDATA customers are ensured seamless integration of their storage networks with complete backward and forward compatibility with McDATA's current and future product line. McDATA's expanded portfolio will allow customers to seamlessly build and grow their storage services infrastructure in several dimensions simultaneously through enhanced:

    • Scalability: Enabling customers to reduce complexity and increase asset utilization and interconnect multi-vendor and multi-application SAN islands through partitioning;
    • Internetworking: Enabling multi-protocol SAN routing, barrier-free distance solutions that provide enhanced business continuance and disaster recovery, and iSCSI solutions;
    • Intelligence: Enabling data movement applications to migrate to the network, and reduced operating costs through policy-based controls.

    In addition to the above, McDATA's Centralized Management and Services Platform (SANavigator and Enterprise Fabric Connectivity Manager) will be extended to support all of these new technologies and services, offering an unparalleled end-to-end software management solution that extends from entry- level iSCSI devices to data center class switching. As a result, McDATA will offer the only SAN management software solution that supports storage infrastructures from workgroups and medium enterprises to data centers to globally networked storage services.
    McDATA has signed definitive agreements to acquire Nishan Systems and Sanera Systems. Under the terms of the acquisition agreements, McDATA will acquire all outstanding shares of Nishan Systems for $83 million in cash and will also assume approximately $2 million in debt. McDATA also will acquire all outstanding shares of Sanera Systems for approximately $102 million in cash, net of debt and cash on hand. McDATA will also provide approximately 1.5 to 1.7 million shares of Class B common stock and approximately $8 million in cash to fund employee retention programs over the next two years for employees added as a result of these acquisitions. These shares have been separately approved and will be amortized as deferred compensation.

    The Sanera and Nishan acquisitions are expected to close within one to two months. The Sanera closing is subject to regulatory approvals, and both transactions are subject to certain customary closing conditions.

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