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Sun buys software firm
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December 4, 2000: 2:31 p.m. ET
Sun Microsystems to buy HighGround Systems for $400 million in stock
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NEW YORK (CNNfn) - Sun Microsystems Inc. announced Monday that it had agreed to acquire HighGround Systems Inc., a privately held maker of storage management software, for $400 million.
Storage hardware and software are rapidly growing areas because of the large amounts of data created by use of the Internet. Sun (SUNW: Research, Estimates), which is best known for its servers and workstations, also is a significant player in the storage equipment market.
Palo Alto, Calif.-based Sun said that the acquisition complements its existing product line. Under the terms of the merger agreement, Sun will acquire HighGround, based in Marlborough, Mass., in a stock swap that is expected to close in the fiscal third quarter ending March 30, 2001.
Following completion of the acquisition, HighGround will become a part of Sun's Network Storage organization, which reports to Executive Vice President Janpieter Scheerder.
HighGround is backed by venture capital funds, including Highland Capital Partners of Boston, Venrock Associates of New York, Centennial Funds of Denver, and Sequel Venture Partners of Boulder, Colo. HighGround also has partnerships with several other players in the storage products industry, including Brocade Communications, Legato, and Network Appliance.
When Sun reported its financial results for its fiscal first quarter, the company said that it had 50 percent year-over-year revenue growth in storage products.
"HighGround should improve Sun's storage software functionality, helping to close the performance gap with EMC's Control Center," said CS First Boston analyst Amit Chopra in a research note issued Monday.
EMC (EMC: Research, Estimates), based in Hopkinton, Mass., is the leading maker of storage hardware used by large enterprises and is also a significant maker of storage software, competing against Veritas (VRTS: Research, Estimates) and Legato (LGTO: Research, Estimates).
In midafternoon trading Monday, Sun was up 13 cents at $77.06, EMC was down 31 cents at $77.94, and Veritas was off $5.75 at $103.19 
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