USA TODAY International Edition
HPE to buy flash storage maker Nimble for $ 1B
Hewlett Packard Enterprise is spending more than $ 1 billion to acquire flash memory maker Nimble Storage.
Hewlett Packard Enterprise will pay $ 12.50 per share in cash for the San Jose- based company, or about $ 1.09 billion. That price represents a 45% premium over Nimble’s closing share price Monday of $ 8.60.
Nimble shares rose 46% to close at $ 12.58 in trading Tuesday. HPE shares were down 1.08%, closing at $ 22.82.
This deal allows HPE to expand the type of flash storage it offers business customers as they seek to improve their data centers with hybrid public- private cloud computing systems.
“We remain focused on high- growth and higher- margin segments of the market,” HPE President and CEO Meg Whitman in a statement.
This is just the latest in HPE’s deals to improve its data center portfolio as it tries to shift toward faster growing business lines.
In January, HPE spent $ 650 million for SimpliVity, a cloud computing infrastructure company, and acquired Cloud Cruiser, an IT analytics company, for an undisclosed sum.
Last month, it cut its earnings forecast for the year, warning of “significant headwinds.”
Nimble, which was founded in 2007 and has about 1,300 employees, will become a wholly- owned subsidiary of HPE after a tender offer is completed and the transaction is closed, which is expected in April.
As more businesses, small and large, turn to flash memory from disk- based storage, “we’ll have a comprehensive, best- in- class portfolio across the full range of the market,” Antonio Neri, executive vice president and general manager of HPE’s enterprise group, said in a blog post.
HPE was formed in 2015, when Whitman split Hewlett Packard into two companies: HPE, which assists business in building their data centers, and HP Inc., which sells printers and personal computers to businesses and consumers.
HPE’s acquisition could help Nimble become profitable more quickly than anticipated, said Amit Daryanani, an analyst with RBC Capital Markets.
Nimble narrowed its adjusted net loss to $ 10.6 million in the fourth quarter of 2016, down from $ 9.4 million the year before, the company announced Tuesday.
As a stand- alone company, Nimble had been expected to become profitable within the next six to eight quarters, Daryanani said in a note to investors, but “an acquisition by a larger entity like HPE driving profitability in a shorter time frame.”
Nimble’s revenue rose 30% to $ 117.0 million, up from $ 90.1 million in the November 2015 to January 2016 period. Sales rose 30%, noted Angelo Zino, equity analyst at CFRA Research. He maintained a Buy recommendation on HPE.
The acquisition, he said, “expands HPE’s presence in the high growth all- flash array market and is complementary to its existing offerings.”