Data storage vendor EMC Corp. has agreed to buy Legato Systems Inc., a maker of storage management software, in a stock transaction valued at US$1.3 billion.
The acquisition is intended to boost EMC's position in the market for information storage systems, in part by allowing it to offer software that will help customers to manage heterogeneous storage environments, the Massachusetts-based vendor said in a statement. EMC's major rivals include IBM Corp. and Hewlett-Packard Co.
EMC also announced preliminary results for its second quarter of 2003, ended June 30. It expects total consolidated revenue to be at the high end of the previously stated range of $1.43 billion to $1.46 billion, and earnings per share to meet, or exceed by $0.01, its previously stated target of $0.03 per diluted share, it said in a separate statement. EMC is due to announce its second-quarter results July 16.
The acquisition of Legato is subject to customary closing conditions, including approval from Legato's stockholders and regulatory approvals, EMC said. It expects to complete the deal in the fourth quarter of 2003.
If the deal is approved, EMC will operate Legato as a software division of EMC headquartered in Mountain View, California. The division will be led by David Wright, Legato's current chairman and chief executive officer (CEO), EMC said.
Under terms of the agreement, Legato stockholders will receive 0.9 shares of EMC common stock for each Legato share they hold. Based on EMC's closing stock price of $11.74 on July 7, the deal is valued at approximately $1.3 billion, the company said.
"This combination is all about improving the access, management and protection of an organization's core asset -- information -- through its complete lifecycle," Joe Tucci, EMC's president and chief executive officer, said in the statement.