Storage networking and Ethernet vendor Emulex is making a bid for Endace, a New Zealand-based network monitoring company.
The bid is worth $130 million cash, or 500 pence/share and, Reuters reports is 65 per cent higher than Endace's London Stock Exchange closing price on December 4.
Emulex, facing a low- or no-growth Fibre Channel HBA market, a lack of take-off in the FCoE market, and ferocious competition in Ethernet, has decided it wants to enter the network performance monitoring market. It describes Endace as "a leading supplier of network visibility infrastructure products," and has issued a Takeover notice as required by the New Zealand Takeovers Code.
Endace is a network performance management company that provides network monitoring appliances, network analytics software and ultra-high speed network access switching with 100 percent accuracy. It says its systems can be found inside large telcos, government agencies, large investment banks and, more recently, inside Fortune 1000 enterprises as 10Gb/s has reached the mainstream.
Endace focusses on 10GbitE and says "high-definition network visibility into real 10-Gigabit environments can only be delivered with purpose-built hardware, which we have been developing tirelessly since 2001. And with 40Gbit/s deployments already in the ground and 100Gbit/s on the doorstep, network visibility is only going to get more challenging for organisations."
We could think of this as Virtual Instruments for Ethernet, VI focussing on Fibre Channel. Like VI, it has developed hardware probes:
"Endace Intelligent Network Recorders, called EndaceProbes, are designed from the ground up to capture, index and record network traffic with continuous 100 per cent accuracy, regardless of network speed, or traffic type."
Endace's independent directors unanimously support the Emulex offer and recommend shareholders accept it. Emulex stated:
Emulex has entered into lock‐up agreements with certain Directors of Endace, including the Chairman and co-founder Dr. Ian Graham. Emulex has also received commitment letters from two other Directors who are shareholders, as well as receiving expressions of support from another founder of the business, Selwyn Pellett.
Emulex CEO Jim McCluney said; "This acquisition provides Emulex with a strategic entry point into the network performance management space at a disruptive point in time, as speeds move to 10Gbit/s, making network visibility from end-to-end a critical requirement in a converged network environment," and asserted it doubled Emulex' total addressable market. Endace us active in a high-growth and high-margin market and Emulex needs more growth and profits.
The company claims that "By combining Emulex’s network convergence adapters and Endace’s network visibility capabilities, Emulex will be the only company that can provide true end-to-end application visibility, optimisation and acceleration." This suggests that as and when FCOE does take off Emulex hopes to enable users to optimise the Ethernet links carrying the storage and other traffic.
Endace CEO Mike Riley is supportive: "The Endace team is excited to be joining forces with Emulex. Our companies share a common vision and have a strong cultural affinity."
Emulex and Endace expect the takeover to complete in the second 2013 quarter. El Reg thinks this is a smart move by Emulex, and expects Virtual Instruments to accelerate its Ethernet monitoring development. Emulex' channel should be well-pleased as they will have an opportunity to cross-sell to new customers and take the Endace offering to all their current Emulex gear customers.
We can view this expansionary move by Emulex as its version of competitor QLogic's Mount Rainier project to add flash caching to its HBAs and so break out of the Fibre Channel/Ethernet storage adapter market. ®
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