EMC buys Legato in $1.3bn stock deal

Storage vendor EMC has boosted its software offering with the $1.3bn acquisition of back-up storage company Legato.

The move is an acknowledgement by EMC that it needs to provide products for customers with multiple storage platforms and the all-stock agreement will add Legato's heterogeneous data protection and recovery software to EMC's traditional hardware range.

Joe Tucci, president and CEO of EMC, said in a statement: "This combination is all about improving the access, management and protection of an organisation's core asset – information – through its complete lifecycle. We're combining best-of-breed storage technology, two winning employee populations with similar reputations for customer focus and two experienced management teams with highly complementary visions for the future of information management."

The deal is expected to be concluded in the fourth quarter of this year and EMC said it will operate Legato as a software division of the company, led by its current CEO David Wright.

Analysts said the purchase is a logical move for EMC into storage software. Claus Egge, programme director at research firm IDC, told silicon.com that market is growing as businesses spend more on applications to manage multi-vendor platforms.

"It is very logical and plays nicely along the line of EMC's stated intentions that they have money to invest and want to be more active in the software market. I see very few IT installations that don't embrace multiple platforms and this is the reality of the market. That is one of the reasons we are predicting pretty aggressive growth in the storage software market."

EMC's rivals were, perhaps not surprisingly, playing down the importance of the news. Chris Boorman, European vice president of marketing for Veritas, told silicon.com: "EMC has been talking about moving to the software game for a long time. The purchase of the number four back-up vendor is not a great deal as far as the marketplace is concerned. EMC is still a hardware vendor."

Separately, EMC said it expects its revenue forecast for the second quarter to be towards the high end of its previously stated range of $1.425bn to $1.475bn.