November 11, 2010 – The bidding war between HP and Dell that ended in HP’s $2.4 billion buyout of 3PAR has sent a number of storage vendors’ stock prices skyward. One good example was Isilon.
Fueled by a combination of acquisition rumors and a stellar quarterly financial report (see “Isilon revenue up 77%”), Isilon’s shares hit an all-time high of $29.48 late last month. The 52-week trading range: a shocking $5.32 to $29.48.
More recently, shares of Isilon (NASDAQ: ISLN) seem to have stabilized, closing at about $26 today.
EMC was reportedly in deep and exclusive talks with Isilon regarding a buyout, with the New York Post reporting that deal was in the $2 billion neighborhood (where 3PAR lived). More recently, various reports said that the EMC-Isilon talks were either dead (because of the pricey neighborhood) or stalled. I’d bet on the latter.
Realistically, I don’t think that (the barely profitable) Isilon can get $2 billion+ from anybody. So I’d still say that EMC is the most likely acquirer.
However, assuming that EMC is out of the bidding, financial analysts cite the usual suspects as possible bidders: Dell, NetApp, HP, IBM and Oracle – usually in that order. However, a bidding war a la HP vs. Dell for 3PAR will be highly unlikely this time around, in part (as I’ve said before) Isilon’s technology is great but it’s a product line gap plugger rather than the game changer that 3PAR would have been for Dell and could be for HP.
Financial analysts such as Morningstar’s Mike Holt, on thestar.com, cite Dell as the most likely candidate to snap up Isilon. However, rather than take what would be sort of a consolation prize after losing its bid for 3PAR, I’m guessing that Dell heads in a different (non-storage) direction in its acquisitions. And besides, Dell has the Exanet technology.
Isilon’s clustered scale-out NAS technology would fit nicely into NetApp’s lineup, but NetApp has shed a lot of blood, sweat, tears and money integrating the Spinnaker technology, and acquiring Isilon would be a lot of expensive crow to eat.
With Isilon’s hiring of Qatalyst Partners (which shepherded the 3PAR bidding), it seems quite likely that Isilon will be acquired. Then again, given the company’s traction and recent earnings report, the Isilon could very well go it alone.
Related blog post: “Isilon revenue up 77%”