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EMC buys Israeli competitor

Deal for flash-device maker put at $430m

By Michael B. Farrell
Globe Staff / May 11, 2012
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Data storage giant EMC Corp. in Hopkinton has purchased an upstart Israeli competitor for a reported $430 million, further deepening its presence in a country where it already has hundreds of employees.

EMC would not disclose the financial terms of the deal, but 451 Research, a New York firm that tracks technology companies, said that EMC paid $430 million to buy XtremIO Inc., a three-year-old, 50-employee firm developing cutting-edge technology for “flash’’ storage.

EMC has maintained sales and research operations in Israel since 1994, and has acquired nine firms with major operations there, including XtremIO.

“Israel’s particularly attractive as a center of tech innovation, with world-class universities and overall positive climate for investment and economic growth,’’ said Dave Farmer, an EMC spokesman, adding that XtremIO’s employees would probably be folded into existing operations. EMC has acquired 70 companies since 2000.

Although EMC has expanded into China, Russia, India, and Egypt, the largest concentration of its 54,000 employees remain in Massachusetts. EMC would not say how many employees it has in Israel.

Last June, Battery Ventures, a venture capital firm with offices in Waltham, Menlo Park, Calif., and Israel, led a $14 million round of funding for XtremIO, which has raised a total of $25 million, according to Seattle research firm PitchBook Data.

With the acquisition, EMC gets a team of software engineers who have been generating buzz in the tech world for advancements in flash storage, which replaces spinning disks in hard drives with smaller, more efficient devices.

“I don’t think anyone would argue that flash technology has altered the storage landscape forever,’’ said Farmer. “And well before our peers, EMC recognized this enormous impact and jumped in with both feet.’’

XtremIO did not return a request for comment.

EMC paid well for XtremIO to eliminate a potential competitive threat to its own growing flash business, said Simon Robinson, research vice president at 451 Research. “EMC just validated this whole space by paying such a price,’’ he said.

The acquisition might prompt other big names in enterprise storage to seek acquisitions to boost their flash capabilities, said Robinson. “Flash is the future of storage,’’ he said.

EMC shares closed Thursday at $26.14, down 4.84 percent.

Michael B. Farrell can be reached at michael.farrell@globe.com.

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Hopkinton’s EMC Corp. has acquired nine tech companies with major Israeli operations, including:
Kashya, a San Jose, Calif., software company with a research lab in Israel (in 2006 for $153 million )
Illuminator Inc., an enterprise software company (in 2007 reportedly for $10 million)
Zettapoint Inc., a database company of Concord and Or Yehuda, Israel (in 2011 for $10 million)
SOURCES: EMC Corp., Pitchbook Data