Data storage industry: A hotbed of M&A speculation

NEW YORK, USA: In recent months the data storage devices industry has become a hotbed of merger and acquisition activity, says research and analyst company the Bedford Report.

The analyst firm adds that as companies get larger and experience diminishing returns in their core business, they are showing their willingness to utilize their large resource pools to acquire smaller companies in a race to diversify themselves.

Also Read: Dell ready to up bid for 3PAR: Report

Moreover, given the limited opportunities for meaningful acquisitions, the companies in stronger financial positions, and the willingness to act, stand to gain the most from such activities.

Tech stocks kicked off the week nicely after EMC said it would buy the data-storage-technology company, Isilon Systems, in a deal worth $2.25 billion.

The deal was unanimously approved by the boards of directors of both companies and is expected to close late this year.

Following the EMC/Isilon deal, speculation of further consolation in the data storage industry has heated up.

Brocade has long been considered a takeover target. In September shares of the company skyrocketed due to reports from Barron's that IBM was considering acquiring the networking gear maker.