A Busy Week for Acquisitions

Mergers and AcquisitionsMost people have heard about recent Microsoft’s recent $26.2B acquisition of LinkedIn. You may also be aware of VMware’s purchase of Arkin and Symantec’s of Blue Coat, which they announced on June 13. My colleague Edward Haletky discusses these acquisitions here. CenturyLink announced its purchase of ElasticBox on June 14. June 16 brought further announcements of acquisitions, these being Samsung’s purchase of Joyent and Cavium’s acquisition of QLogic.

First, let’s look at the easier of the two purchases to understand, Caviums acquisition of QLogic. Cavium is most likely one of those companies whose product you are using all the time without knowing it. For example, if you own certain Linksys devices or your company runs a Citrix MPX or a Blue Coat packet shaper, you are using Cavium technology.

This company is a provider of silicon for networking, storage, and compute devices, which means that its purchase of QLogic is quite synergistic. QLogic is a manufacturer of Fibre Channel switches, HBAs, and ASICs for other vendors, Fibre Channel devices, and converged network controllers.

This deal is costing Cavium $1.3B, made up of $100M in short-term bridging debt, $650M in long-term debt, and a $400M equity raise. Cavium has stated that it believes there will be about $45M in “annualized cost synergies” (or in better-known corporate speech, “workforce reduction”).

Moving on to Samsung’s acquisition of Joyent, at first glance this seems an odd acquisition. Samsung is a manufacturer of a very popular mobile phone and tablet product. On the face of it, Samsung is not a prime candidate for the purchase of a cloud company. However, it makes perfect sense, especially seeing as Samsung intends to keep the company as an independent subsidiary.

Joyent as a company is the custodian of Node.js. It is also the provider of Triton, a Containers as a Service product, and Manta, an object-based Storage as a Service product based on ZFS. With this purchase, Samsung now has the capability to develop and grow its own cloud platform capable of supporting its ever-growing lineup of mobile, Internet of Things (IoT), and cloud-based software and services, including its fledgling payment service. This is the start of a divergence in Samsung’s portfolio. Traditionally, Samsung has been seen as a hardware vendor, but with this purchase and the earlier purchase of SmartThings and LoopPay, we are starting to see a major move into cloud services.

There is no indication of how much Samsung has paid for Joyent. This is also a big win for Joyent, which appears to be estastic about its acquisition. According to Joyent CEO Scott Hammond, “…until today, we lacked one thing. We lacked the scale required to compete effectively in the large, rapidly growing and fiercely competitive cloud computing market.”

Finally, we move on to CenturyLink, which has acquired ElasticBox. This one appears to have flown under most of people’s radar. CenturyLink is a public cloud vendor that specializes in hybrid scenarios. Traditionally, it was in the hosting and website/domain business, but it has moved to develop its own IaaS cloud service based on VMware technology. ElasticBox provides a multicloud-aware application delivery manager that enables enterprises to achieve better business agility with lower stress and total control. It has had a number of significant customer wins, like Netflix, DeNA, and Cytobank, which have used it to accelerate their application lifecycles. This is a canny acquisition for CenturyLink. The control this extends over its cloud enhances its offering by enabling the ability to manage client investment in AWS, Azure, and IBM SoftLayer from a single management interface.

This is a powerful story, as it moves CenturyLink from being just another VMware-based service provider to having the potential to lead multicloud management.


This has been a busy week in the acquisitions and mergers arena. These acquisitions may have been dwarfed by the massive Microsoft/LinkedIn deal, but they are important in their own right. We at the Virtualization Practice feel that this is just the tip of the iceberg. We expect to see more consolidation acquisitions in the next couple of years as the battle for dominance in the market sector gains pace. Expansion through innovation is giving way to an expansion through acquisition phase as cloud computing gains greater market acceptance and providers’ focus moves from feature enhancement to a customer-retention and stability-first position. It will be interesting to see if the DevOps mantra of continuous improvement survives the maturation of this market space.

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