EMC snaps up Legato for $1.3bn

Storage systems vendor EMC is to buy enterprise management software firm Legato Systems in a $1.3bn stock deal.

Under the terms of the agreement, Legato stockholders will receive 0.9 of a share of EMC common stock for each share of Legato common stock. The valuation of $1.3bn is based on EMC's 7 July closing price of $11.74.

When completed, probably in the fourth quarter, Legato will be run as a software division, headed up by David Wright, Legato's current chairman and chief executive.

EMC expects to incur an expense charge in the fourth quarter for the value of Legato's in-process R&D costs.

"This combination is all about improving the access, management and protection of an organisation's core asset - information - through its complete lifecycle," said Joe Tucci, president and chief executive at EMC, in a statement.

EMC claimed that the deal will accelerate its ability to deliver a complete information lifecycle management solution, where data is prioritised and then moved quickly to progressively cheaper storage media before eventual deletion.

Hamish Macarthur, managing director of storage consultancy Macarthur Stroud International, told vnunet.com that this was a sensible move by EMC.

"To maintain leadership in storage you now have to look beyond storage arrays to the whole storage management arena," he said.

In the short term, EMC had to deliver a consistent picture of how its software products would work together, including its BMC Patrol Storage Manager acquired last week.

"EMC needs to engage in a seamless way with its software partners so that they feel comfortable with its open approach," added Macarthur.

Wright explained that Legato would now have additional resources to further accelerate development and delivery of software to protect and manage customer information.