EMC has agreed to acquire Isilon Systems in a $2.25 billion deal that marks the latest major deal in the data storage industry.
The deal will be worth $33.85 per share in cash, net of Isilon's existing cash balance, EMC said in a statement. The transaction is likely to wrap up by the end of the year and will not have a material impact on EMC's full year earnings and likely will be helpful for its 2011 earnings.
Exclusive talks between EMC and Isilon had in recent weeks gone cold over price, but the two companies were able to finish a deal over the weekend. M&A chatter has been surrounding the red-hot data storage market since Hewlett-Packard acquired 3Par for $2.4 billion earlier this year.
Isilon shares jumped 18 percent in premarket trading to $31.
Isilon operates in what is known as the "Scale-out NAS" segment, an area of so-called Big Data that is expected to grow 36 percent each year and will be worth $6 billion in 2014, EMC said.
"EMC brings unique value to Isilon through our highly complementary portfolio, engineering depth, financial strength and global sales reach," Pat Gelsinger, President and COO of EMC, said in a statement. "Isilon will enable EMC to accelerate our storage revenue growth and serve our customers across a broader range of the storage systems market."
EMC affirmed its full-year 2010 outlook in conjunction with the announcement.
Another data storage provider, Compellent Technologies, held preliminary meetings with bankers to advise it on options including a sale, a source told Reuters last month.
Isilon shares, valued at $1.75 billion, are up nearly five-fold in the last 52 weeks. They closed at $26.29 Friday on Nasdaq.