IBM to buy data storage firm Netezza for $1.7 bn

International Business Machines (IBM), the $93.4 billion computer giant yesterday said it was buying data warehousing company Netezza Corporation for $1.7 billion in an all-cash deal, as the remaining medium size data storage companies become hot property in the US.

The deal comes soon after Hewlett-Packard with its $2.4 billion bid, won an 18-day bidding war against Dell for 3PAR, a virtual data storage company that had barely made a profit in its 11 year existence. (See: HP knocks out Dell for 3PAR with $2.4-bn bid)

Netezza had reported sales of $190 million last year and net income of 4.2 million, a drastic drop from the $31.5 million it posted in 2008.

Incidentally, HP's data storage acquisition, 3PAR, reported sales that were similar to that of Netezza in 2009, having reported revenues of just $194 million, which is less than 1 per cent of the 2009 revenues of either HP or Dell.

IBM is paying for the New York-listed Netezza $27 a share, a premium of 10 per cent over Netezza's Friday closing price of $24.60.

Netezza shares price of $24.60 is nearly double from the $15 it was trading when the bidding war for 3PAR started in late August.