Dell Computer has signed a definitive agreement to purchase privately held storage area network (SAN) specialist, Convergenet, for $340 million in a bid to fulfil its aim of becoming one of the top three storage vendors.
Under the terms of the deal, Dell will exchange about 6.9 million shares of its common stock for all the outstanding shares and options of Convergenet and the boards of both companies have already approved the acquisition.
After the transaction is completed in an anticipated 60 days, however, the direct PC supplier will take a one time charge against after tax third quarter earnings of between $0.5-0.7 for purchased inprocess research and development expenses. The First Call analysts' consensus had expected earnings of $0.20.
Michael Lambert, senior vice president of Dell's Enterprise Systems Group, said: "Our customers want storage technology that connects with any open standards server. The technology we acquire with Convergenet will help make that happen. Convergenet's technology fits our strategy to deliver SAN solutions that speed access to and backup of enterprise data, that simplify configuration, allocation and management of storage systems and that help ensure data is available all the time."
Dell will integrate Convergenet's SAN offerings into its Powervault storage systems to enable them to connect to any server. The Powervault family is based on Data General's Clariion offerings, which Dell started OEMing last year (see VNU Newswire, 1 July, 1998).
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