By Scott Denne
OF DOW JONES VENTUREWIRE
International Business Machines Corp. (IBM) is continuing its
buying spree with its agreement to acquire Blade Network
Technologies Inc., a maker of Ethernet switches.
Terms of the deal were not disclosed.
With $30 million in equity financing from Garnett & Helfrich
Capital, Blade Network was spun out of Nortel Networks Corp. in
early 2006. A year ago, the Santa Clara, Calif.-based company
raised a $10 million Series B that brought in NEC Corp. (6701.TO),
Juniper Networks Inc. and another undisclosed technology company as
investors, giving the company a $240 million valuation.
Representatives of IBM declined to comment. Garnett &
Helfrich, which owns a majority stake in the business, did not
return calls seeking comment.
Blade Networks makes switches built for blade server
environments and claims to move virtual servers around a data
center without the need to reconfigure each one's network settings.
The company finished 2009 with $79 million in sales and was
targeting more than $100 million this year.
IBM has resold Blade Network's products since 2002 and though
Blade Networks has several similar OEM deals with other companies,
like NEC and Hewlett-Packard Co. (HPQ), it has an especially
"strong fit" with IBM, said Tim Shaughnessy, its vice president of
marketing.
This acquisition, which brings IBM its first networking switch,
is Big Blue's 14th deal this year. Other venture-backed companies
it acquired include desktop management company BigFix Inc., data
integration company Cast Iron Systems Inc. and data compression
company Storwize Inc.
The year it was founded, Blade Networks had sales of $30
million. It is profitable, with zero debt and $27 million in its
bank account, the company's chief executive, Vikram Mehta, told
VentureWire in February.
The deal is expected to close by the end of the year.
(This story also appears in Dow Jones VentureWire, a daily
newsletter that covers venture-capital investing and start-up
companies.)
-By Scott Denne, Dow Jones VentureWire, 212-416-2028;
scott.denne@dowjones.com