Agilysys to buy Sun reseller Innovativ

IT distributor Agilysys Inc. continued its strategy of growing by acquisition, announcing plans to buy Innovativ Systems Design Inc., a major U.S. reseller of Sun Microsystems Inc.’s servers and storage products.

It’s the third purchase in six months for Agilysys, whose ultimate goal is to double in size to become a US$1 billion business within two years.

Agilysys will pay US$100 million in cash for Innovativ. The deal, announced Friday, also includes a provision for the vendor to make an extra maximum payment of $90 million provided the Innovativ business achieves specific financial targets in the first two years after purchase. Agilysys hopes to close the acquisition on or around July 1.

With headquarters in Edison, New Jersey, Innovativ is a systems integrator and reseller of servers, enterprise storage management and services, with a particular emphasis on the financial services and telecommunications industries.

“The acquisition of Innovativ will establish a new and significant relationship between Sun and Agilysys,” Arthur Rhein, Agilysys chairman, CEO and president, said in a release. He noted that the company already resells products from Sun’s storage rivals EMC Corp., Hewlett-Packard Co. and IBM Corp. and its server competitors HP and IBM. Once the deal is complete, the firm will establish a new Agilysys Sun technology solutions business unit to be headed by Innovativ’s current CEO Tony Mellina.

In recent months, Agilysys has bought Visual One Systems, a developer and seller of Windows-based software for the hospitality industry, and Stack Computer, a technology integrator that focuses on high-availability storage from EMC and customers in the health-care, financial services and manufacturing industries.

At the same time, Agilysys divested itself of its KeyLink systems distribution business assets to Arrow Electronics Inc. in March for $485 million in cash. The offloading of the KeyLink operation is in line with Agilysys’ aim to concentrate exclusively on selling technology directly to corporate and public-sector customers.

Factoring in the acquisitions of both Stack and Innovativ, Agilysys will expand annual revenue to over $800 million, on its way to becoming a $1 billion operation in 2009 and a $1.5 billion business come 2010.