Legato to acquire OTG Software

Enterprise storage management software vendor Legato has announced the purchase of data storage maker OTG Software.

Enterprise storage management software vendor Legato has announced the purchase of data storage maker OTG Software.

Under the deal, Legato will acquire all outstanding shares of OTG in a cash and stock transaction valued at approximately $403m, or $11.13 per share. Each share of OTG common stock will be converted into the right to receive 0.6876 of a share of Legato common stock and $2.50 in cash.

David Wright, chairman, president and chief executive of Legato, said that the combined companies would be able to expand their product lines.

"This acquisition allows us to accelerate our current ability to provide our customers with the most scalable and secure management and applications solutions available in the market today," Wright said. "Our companies share a common vision about how the market is evolving and what our customers need."

Jim Chappell, a spokesman for Legato, said the two companies offer products in "adjacent technology spaces" but with little overlap.

OTG has hitherto had a small presence outside its home market, while about half of Legato's business comes from outside the US.

In the past, OTG has not dealt with customers as directly as Legato. But that will change to reflect Legato's business approach, Chappell said.

No information is yet available on how the merger will affect staffing at the companies, he said.

OTG sells data storage, data access and e-mail management software.

The merger still must be approved by shareholders on both sides, and receive regulatory approval. If approved, the deal is expected to close by the end of June.

Richard Kay, chairman, president and chief executive of OTG, will join Legato's board of directors after completion of the merger.

Legato had revenue of $231.4m (£162.3m) in 2000, while OTG had revenue of $43.8m (£30.7m).

Jim Garden, an analyst at Technology Business Research said that as the third largest player in the storage software market, Legato is "trying to bulk up through acquisitions."

Even so, he noted: "Acquisitions in this time frame are a little bit surprising".

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