Dell to acquire ConvergeNet for US$340 million

Dell Computer Corp. announced earlier this month an agreement to buy ConvergeNet Technologies Inc., a privately held storage networking company in San Jose, Calif.

The acquisition, valued at about US$340 million, is intended to help Dell become one of the top three storage vendors in the world, the company said in a statement. ConvergeNet offers data storage products and technologies that help corporations build storage area networks (SANs).

“The ConvergeNet technology combined with Dell’s efficient, low-cost business model will mean our customers can get leading-edge data-centre storage solutions at values unseen before in the industry,” Michael Lambert, senior vice-president of Dell’s Enterprise Systems Group, said in the statement.

Dell entered the storage market last year with the launch of the PowerVault 650F storage subsystem, which offers up to two terabytes of data storage in one rack. The line was expanded late last year with the PowerVault 200S, the Power Vault 130T tape library for high-volume data backup, and the Dell PowerEdge Expandable RAID Controller 2, which provides data storage to Power Edge servers.

This year, Dell introduced the PowerVault storage area network for Windows NT environments. Dell also released the PowerVault 700 series of network-attached storage products.

The ConvergeNet acquisition will allow Dell’s PowerVault storage products to use SAN technology

to connect to any Intel Corp.-based or RISC (reduced instruction set computer)-based server running flavours of Unix including Solaris, Windows NT, Windows 2000, NetWare or Linux operating systems, Dell said.

Dell will exchange about 6.9 million shares of its stock for all outstanding shares and options of ConvergeNet as part of the transaction.

Upon completion of the deal, which is expected within 60 days, Dell will take a one-time charge against after-tax earnings of 5 cents to 7 cents per share for purchased in-process research and development expenses, the company said.

Dell in Round Rock, Tex., is at ConvergeNet is at