F5 Acquires Acopia for $210M

WAN optimization specialist F5 will spend $210 million to acquire privately held Acopia Networks as it attempts to gain a foothold in the file virtualization market. (See F5 to Acquire Acopia.)

The all-cash transaction, which is expected to close before mid-September, dwarfs F5's $43 million acquisition of fellow WAN optimization vendor Swan Labs in late 2005. (See F5 Snaps Up Swan Labs, F5 Completes Swan Buy, and F5 Fires Up WAN Optimization.)

Speaking on a conference call this morning, F5 CEO John McAdam explained that the deal leaves his firm well positioned to handle the current explosion in file-based data.

"File virtualization is an exciting and largely untouched market opportunity," he said, adding that the Acopia acquisition significantly increases F5's reach in the data center.

Although block-based wares such as IBM's SAN Volume Controller (SVC) have dominated the storage virtualization market up to now, more and more users are looking to technologies such as Acopia's to share files globally around their organizations. (See Wiley Picks Acopia, Acopia Helps Cabot Oil & Gas, and Storage Virtualization Edges On.)Acopia is one of a number of vendors, including Attune, NetApp, and NeoPath (which was recently acquired by Cisco), that offer file-based virtualization technology. (See Attune Picked by Granite, NetApp Stokes Competitive Fires, Acopia Offers NeoPath Buyback, and Cisco Completes Acquisition.)

The file virtualization field can be subdivided between network-based products that run on a switch, such as Acopia's, and offerings that run on the storage device itself, such as NetApp's Ontap GX. (See NetApp Ships Data Ontap GX.)

Up until now, F5 has focused predominantly on accelerating Web traffic and applications such as Sharepoint, Siebel, and SAP, so this is the vendor's first foray into the world of storage. (See F5 Launches New FirePass Controller, F5 Adds LAN Solution, F5 Intros WANJet, and F5 Reports Q2.)

One analyst on this morning's call highlighted this as a major challenge for F5. "You guys haven't had great success with acquisitions adjacent to [your flagship product] BIG-IP," he said, pointing to the difficulties integrating Swan Labs's WANJet offering for WAN optimization. "Storage is a very different animal."

F5 CEO McAdam agreed that storage is a new area of focus for the vendor. "There's no question that it is a slightly different animal," he said, adding that F5 plans to "significantly scale up" the Acopia organization by hiring more sales, support, and development staff. With regard to previous acquisitions, McAdam explained that, unlike WANJet, Acopia's file virtualization offering is a "best of breed" technology.Acopia's 130-strong workforce will now be moving over to F5, although the WAN optimization vendor told Byte and Switch that there will be no relocation of staff from Acopia's Massachusetts HQ. "Acopia has excellent facilities in Lowell, including a world-class lab, which will be a valuable asset for us in serving the Eastern U.S. market," said F5 spokeswoman Holly Hagerman.

Acopia's CEO Christopher Lynch was not present on this morning's call, opening to question whether he'll actually move to F5 when the deal concludes next month. In a prepared statement, however, Lynch expresses "excitement" at joining the F5 team.

At this stage, it is still unclear how F5 will integrate Acopia's offerings into its own products, although execs on this morning's call promised that there will be no impact on current customers. "We will continue to make the Acopia solutions available as distinct devices," said Dan Matte, F5's senior vice president of marketing, adding that file virtualization features will eventually be migrated onto Acopia's WAN optimization products.

Today's deal also offers F5 a new route to market for its own offerings, as the vendor looks to tap into Acopia's 100-plus list of customers, which include Quest Diagnostics and WebEx.

In trading today, F5 shares fell $6.03 (7.21%) to $77.66.James Rogers, Senior Editor Byte and Switch