Emulex today acquired its 10-Gigabit Ethernet silicon partner ServerEngines for $78 million in cash and eight million shares of Emulex stock to be issued at closing, which could bring the price to around $160 million.
The deal is expected to close next month. The Emulex shares would be worth $81 million using Friday’s closing price of $10.11.
Emulex sold ServerEngines silicon with its OneConnect Universal Converged Network Adapters (UCNAs) adapters for the past two years as part of an OEM and joint development deal between the two. ServerEngines contributed the Ethernet and iSCSI portions of the ASICs for the converged adapters.
Emulex CEO Jim McCluney says ServerEngines gave Emulex a fast path to combining Etherent with its own Fibre Channel stack, and now that the UCNAs are coming to market it makes sense to bring the technology in-house. That gives Emulex more control of the technology.
“We saw this as a new game where the old rules didn’t apply,” McCluney said of converged networking. “Instead of repurposing our Fibre Channel ASICS, we wanted to do something unique. We went out and found best of breed 10-gigabit ASIC to combine with our own Fibre Channel stack.We felt the time was right to take things to the next level.”
ServerEngines has two main product families — the BladeEngine 10-GigE ASICs that Emulex uses in OneConnect, and a Pilot family of server management controllers soled by Cisco, Hewlett-Packard, NEC, and Unisys. McCluney said the Pilot products will bring Emulex around $4 million in revenues each quarter.
ServerEngines has about 170 employees, mostly engineers based in Sunnyvale, CA, Austin, TX, and Hyderabad, India.