from the June 2012 issue

EMC buys XtremIO for $430m

The storage systems company is EMC's sixth acquisition in Israel. After several months of intensive talks, EMC Corporation (NYSE: EMC) has acquired storage systems company XtremIO for $430 million. EMC confirmed the acquisition on Thursday with a brief statement saying, "XtremIO's all-Flash, scale-out, enterprise storage architecture was designed to leverage Flash memory. XtremIO technology will complement the range of EMC Flash-based systems and software stemming from EMC's early entry into the Flash storage market. The all-cash transaction is not expected to have a material impact to EMC GAAP or non-GAAP EPS for the full 2012 fiscal year."

XtremIO was founded by a group of Israeli high tech veterans including Aryeh Margi, a co-founder of M-Systems; Shuki Bruck, Yaron Segev, and CEO Ehud Rokach, a former senior executive at Orckit and CEO Corrigent.

The exit is an exceptional success for Israel's venture capital industry. The company was founded in 2009 and has raised only $25 million to date in two financing rounds. Founders and employees will also be sharing out a great deal of money. The company has offices in Herzliya and San Jose, California.

Investors also include venture capital funds and possibly one of the global storage giants which also invested in the Israeli company. The two best known investors in XtremIO are Jerusalem Venture Partners (JVP) and Giza Venture Capital, which each hold 20-30% of the start up, in other words returns of $100-150 million. Other investors include Battery Ventures and Lightspeed Ventures. The last fundraising round was in late 2011 and the company still probably has several million dollars left to spend from that.

The company has yet to generate revenue from its storage systems which are based on flash memory, and according to its website it is currently conducting trials with customers and potential partners. The system itself is not yet available and will only be completed later in 2012. While the talks for the acquisition have been exceptional in terms of the sums of money involved, nevertheless such a large amount is appropriate for the storage sector.

The acquisition of Radvision, which does videoconferencing and telepresence technologies over IP and wireless networks, will provide Avaya customers with high-definition video collaboration products, the companies stated.

Each company's board of directors has approved the arrangement, but it is still subject to closing conditions. The takeover should close within 90 days if all is approved, with Radvision shareholders receiving $11.85 a share.

"We believe this transaction will leverage a highly-skilled, incredibly talented and experienced workforce ready to deliver video to enterprise customers," stated Avaya CEO Kevin Kennedy.

Avaya, which is owned by private-equity firms Silver Lake and TPG Capital, provides business collaboration and communications solutions. The New Jersey-based firm had 375 employees in Ottawa as of September.

In Ottawa, Avaya bought Nortel Network Corp.'s enterprise solutions business for US$915 million in 2009 and became a tenant at the former Nortel facility on Carling Avenue.

Avaya signed a 10-year lease at 425 Legget Dr. last fall with property management and development firm Canderel. The company will occupy nearly the entire listed space of the building - 104,000 square feet - around fall 2012.

Reprinted from the Israel High-Tech & Investment Report June 2012

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