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This morning, SanDisk
(NASDAQ:SNDK) announced it is buying enterprise flash storage company Fusion-io
(NYSE:FIO) for $11.25 per share in cash, or $1.1 billion, net of cash assumed.
This looks like a good deal for SanDisk, which has over $4 billion in net cash on its balance sheet.
As of Friday's close, Fusion-io was trading at $9.28, 78% below its all-time high. The company has suffered from executive departures and a big slowdown in growth as major customers like Apple
(NASDAQ:AAPL) and Facebook
(NASDAQ:FB) reduced spending.
SanDisk had been beefing up its enterprise SSD offerings by buying companies like Pilant Technology, SMART Storage Systems, and FlashSoft, and Fusion-io's expertise in the PCIe SSD market makes it a logical fit.
Fusion-io also brings a lot of OEM partnerships with companies like Cisco
(NASDAQ:CSCO) and IBM
(NYSE:IBM), and it still has a pretty impressive client list, selling to companies like Pandora
(NYSE:P), Zappos, Datalogix, Zendesk, and Rakuten.
Customer concentration is still a problem, but it isn't as bad as it was at the IPO.
Last quarter, Fusion-io customers that had more than 10% of revenues were 61% of total revenues. At its IPO (Q3 of 2011), three customers accounted for 77% of revenues.
And in any case, SanDisk is likely looking at this deal as a portfolio addition rather than simply a purchase of a revenue stream.
As of the time I'm writing this (9:25 a.m. EDT), Fusion-io is trading at $11.45, above the $11.25 deal price. There's probably some short-covering going on, but I also wouldn't be surprised to see traders grumbling about the price.
I'm not long Fusion-io, but if I were, I'd be ringing the register here on at least part of a position.
Position in AAPL
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