Hightail hires RBC as acquisition talks heat up: Sources

Source: Hightail

The hypercompetitive data storage market appears poised to start consolidating.

Hightail, a provider of cloud software to send and receive large files, has hired RBC Capital Markets as it engages in discussions to be acquired, said sources familiar with the matter. The start-up, formerly known as YouSendIt, has had talks with companies including security software provider Barracuda Networks, storage systems maker NetApp and Hewlett-Packard, said the sources, who asked not to be identified because the discussions are ongoing and there's no guarantee that a deal gets finalized.

As reported last month, Hightail's efforts to capture consumer attention in a market with high-profile names like Dropbox and Box as well as competitive offerings from Google, Apple and Microsoft has made its way to Silicon Valley's billboards. The company recently started running a campaign on Highway 101, between Palo Alto and San Francisco, telling drivers that their "files should be neither Dropped nor Boxed."

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Founded a decade ago, Hightail has raised $83 million in venture funding, far less than Dropbox, which is focused on consumers, or Box, which sells to businesses. Those companies have both been valued in the billions of dollars, with Dropbox raising money this year at a valuation of $10 billion. Box has been on file to go public since March, though that offering has hit some snags due to concerns about the company's high costs—it spends more on sales and marketing than it generates in revenue.

While Hightail is growing and has more than 40 million registered users, trying to remain independent as a provider of file storage and collaboration tools is getting harder as data storage becomes a commodity.

In March, Google cut the price of its Drive service by 60 percent, and Box gives away its consumer offering to spur usage and lure businesses to the paid version of the product. Hightail provides 2 gigabytes of storage for free and charges $15.99 a month for unlimited storage with a higher-priced tier for people working in teams.

Dropbox, the 'home for your important stuff'
Dropbox, the 'home for your important stuff'

A larger acquirer could potentially tie Hightail's offering into a suite of products, by adding a user-friendly way for workers to save and send files.

Representatives for Hightail and RBC declined to comment as did a spokesperson for Hewlett-Packard. Calls to Barracuda and NetApp weren't immediately returned.

Hightail's last financing was in December, when the Campbell, California-based company raised $34 million, in a round led by Western Digital Capital. In May 2012, former Yahoo and AOL executive Brad Garlinghouse was appointed chief executive officer of YouSendIt, and a year later the company changed its name to Hightail.

By CNBC's Ari Levy