March 7th, 2017 by Brian Beeler
HPE To Acquire Nimble Storage
Just weeks after filing a portfolio hole by acquiring Simplivity for $650 million, HPE is back at it, this time doling out $1 billion (plus $200 million in unvested equity awards) for once-hybrid-startup Nimble Storage. HPE feels Nimble will fill a gap in the midmarket, where apparently HPE is not resonating well, even with low-cost 3PAR bundles, MSA, StoreEasy NAS, StoreVirtual and even vSAN Ready Nodes. Both purchases are relatively low risk for HPE, as Simplivity and Nimble were both perpetually operating at a loss. Nimble was clearly in a dire situation having to accept $12.50 per share. Though a 45% premium over yesterday's close, that's still roughly half of where it traded in the fall of 2015 and way off the peak of almost $53 in 2014. For its part though, HPE has the marketing team, engineering resources and support infrastructure to continue to offer Nimble's 10,000 customers a good experience, while mapping out a plan to integrate with HPE's other storage assets over time.
HPE identified Nimble's InfoSight Predictive Analytics platform as the key asset. InfoSight provides real-time monitoring, reporting, forecasting and planning capabilities to customers in order to enable better long term planning for storage. InfoSight is claimed to automatically detect 90 percent of all issues within a customer’s infrastructure, with the capacity to resolve over 85 percent of them. For smaller or constrained IT departments, such enablement is a great asset and speaks to why Nimble was able to grow in the SMB. HPE intends to take InfoSight across their storage portfolio.
As all deals like this goes, execution by HPE is going to be the metric by which this acquisition is judged. HPE is still sorting through the process of decoupling the HP business, which includes most consumer facing products, from the enterprise business. With nearly a dozen storage products in the portfolio, they face the same challenges that the Dell EMC merger faces. Not all of it can or will survive and HPE is going ot have to be careful to create messaging that makes sense to their large and diverse customer base. InfoSight and some of Nimble's software tools look like layups to add value across the portfolio, the Nimble hardware may be another story.
The tender offer and merger and closing of the transaction are expected to be completed in April, subject to the satisfaction or waiver of the offer conditions set forth in the agreement.