Veritas buys KVault Software in $225M deal

Storage and backup application vendor Veritas Software Corp. is acquiring e-mail archiving vendor KVault Software Ltd. (KVS) to bolster its offerings to customers.

In an announcement Tuesday, Mountain View, Calif.-based Veritas said it will pay about $225 million for Winnersh Triangle, England-based KVS, whose applications allow policy-based archiving of corporate e-mail.

“By helping improve the availability and performance of Microsoft Exchange and driving down storage costs, KVS will add another strategic component to the Veritas utility computing portfolio,” Gary Bloom, chairman, president and CEO of Veritas, said in a statement. “With growing regulatory requirements, customers need solutions that allow them to quickly discover specific information, whether it’s in e-mail or personal documents. With the addition of KVS, we can deliver customers the market-leading software for storing, managing, backing up and archiving all their information.”

The acquisition is expected to be completed by the end of September, according to the companies. When the deal is completed, the approximately 205 employees of KVS around the world will become part of a separate unit under the leadership of the current KVS management team.

Analysts said the acquisition makes sense for Veritas.

“I think it helps them play catch-up” to similar acquisitions by competitors such as EMC Corp., said Scott Whitehead, a storage analyst at Technology Business Research Inc. in Hampton, N.H. Last October, storage vendor EMC acquired content management application vendor Documentum Inc. to make it easier for customers to fill their storage needs with one vendor. That deal gave EMC a “marketing advantage over Veritas,” Whitehead said.

The KVS acquisition will also give Veritas more strength in Europe, since that’s where KVS is based and has existing business relationships, he said. “I certainly think these additional building blocks will make it easier for customers to deal with one vendor,” he noted.

Rhoda Phillips, a storage software analyst at IDC in Framingham, Mass., said that of all of Veritas’ acquisitions, “this is the most logical one.”

“There’s more synergy,” she said. “It gets them into the compliance (marketplace).”

In a letter on KVS’s Web site, CEO Mike Hedger called the deal a “perfect strategic alignment. Together, Veritas and KVS can offer customers the ability to improve the availability and performance of virtually all of the data in their organization while reducing the cost and complexity of storage and storage management.

“E-mail archiving continues to represent a substantial market opportunity, and I am very confident that by joining our efforts with Veritas’ worldwide presence, scale and customer relationships, we can continue to serve customers’ e-mail archiving needs and grow KVS’s leadership status,” he said.

For KVS, the deal with Veritas gives the company the ability to expand its reach around the world while leveraging existing Veritas offerings, marketing and resources, Hedger said.