By Heidi Biggar
In the first of several anticipated announcements, Tandberg Data last month said it plans to acquire tape automation manufacturer Breece Hill Technologies for a reported $12 million, which includes $5.9 million for outstanding shares of Breece Hill stock and some $5 million in Breece Hill debt. News of the acquisition came just weeks after Tandberg elected a new board of directors. The acquisition was expected to be finalized January 31.
"We knew a year ago that we wanted to be in the solutions business," says Al Duras, Tandberg Data's vice president and general manager. "Tape drives are a commodity product. To maintain our margins, we knew we needed to make a move, and a tape automation company is the first step."
According to International Data Corp. (www.idc.com), OEM tape automation revenues are expected to top $2 billion this year, increasing 25.3% per year over the period 1999 to 2003 (see Anlaysts View, InfoStor, December 1999).
While more acquisitions and partnerships are expected this year, Tandberg's transformation into a solutions company is expected to take place over three years. On tap are drive, automation, and consulting services, among others.
Analysts expect the acquisition to benefit both companies. "It's a win-win situation for both companies," says Fara Yale, chief analyst, computer storage service, at Dataquest (www.gartner.com). "It fits with Tandberg's strategy of broadening its product line and revenue base; it makes Breece Hill a more attractive partner for customers; and it should help increase sales of Breece Hill's libraries in European markets," explains Yale.
To optimize its cost structure, Tandberg plans to move automation and manufacturing from its Oslo, Norway, headquarters to Breece Hill's Boulder, CO, facility. Tandberg currently manufactures Travan NS, SLR, and DLT tape drives, as well SLR autoloaders.
Breece Hill, meanwhile, early this year is expected to launch two new categories of linear tape and helical scan libraries for entry-level, midrange, and high-end markets. "We've had the design concept, but we've had a shortage of working capital to bring these products to market," says Jim Watson, Breece Hill president and CEO. Supported technologies will include Benchmark DLT1, Ecrix VXA, Exabyte Mammoth, LTO, Quantum/Tandberg DLT, and Sony AIT.
Additionally, Breece will soon bring an SLR50/SLR100 library to market for higher-end applications, giving Tandberg's SLR line a much-needed boost. The company is also reportedly developing an embedded circuit board for SAN connectivity.
Tandberg is expected to run Breece Hill as a separate company, with library products carrying both the Breece Hill and Tandberg Data label. No layoffs are anticipated.