OCZ Technology to Acquire Indilinx Co., Ltd!
Subject: Storage | March 14, 2011 - 06:58 PM | Jeremy Hellstrom
The purchase of Indilinx by OCZ caught us by surprise here at PC Perspective; not because it makes no sense but because we hadn't heard any news 'behind the scenes' as it were. A different way of looking at it is that Indilinx now owns about 10% of OCZ, but either way this spells some interesting changes to the already interesting (to enthusiasts) SSD market. We are getting in touch with OCZ and awaiting the web cast which will occur shortly so keep your eyes on this page for updates as we get them.
- OCZ does not plan to drop other controller technology from their lineup (i.e. SandForce and Vertex are not going anywhere).
- Indilinx will continue to supply their controllers to other SSD makers.
- Indilinx has new(er) controllers in their pipeline.
- The acquisition will enable OCZ to implement Indilinx chips at close to the cost of the die, which is significantly cheaper than presently available. This will increase OCZ's margin on those SSD's as well as help to drop prices in the future.
Obviously this acquisition creates an interesting dynamic with SSD makers, and we will be seeing ripples from this in the coming months. Even if OCZ's competitors were to all drop Indilinx, there are many Indilinx+OEM relationships that would continue, as they have no connection to OCZ.
SAN JOSE, Calif., March 14, 2011 (GLOBE NEWSWIRE) -- OCZ Technology Group, Inc. (Nasdaq:OCZ - News), a leading provider of high-performance solid-state drives (SSDs) for computing devices and systems, today announced it has signed a definitive agreement to acquire Indilinx Co., Ltd, a privately held fabless provider of flash controller silicon and software for SSDs.
Indilinx is headquartered in South Korea and currently sells its line of flash controllers to SSD manufacturers and Tier One OEMs for use in a broad array of products addressing multiple markets, including embedded and industrial as well as laptops and PCs. Indilinx controllers have been deployed within OCZ's SSD products since December 2008, and are currently featured in the Z-Drive series of PCIe-based SSDs. Indilinx's technology is expected to enable OCZ to expand its presence into the embedded, hybrid storage, and industrial markets.
OCZ will gain substantial intellectual property from Indilinx including approximately 20 patents and patent applications related exclusively to the business as part of the transaction. For example, the acquisition is expected to extend OCZ's capabilities with advanced controller technology including Tinkerbell(TM), a high performance eMMC 4.4 x controller that replaces SSDs in consumer electronic devices such as smartphones, tablet PCs, GPS units, and netbooks. Tinkerbell improves the user experience in consumer mobile devices for applications such as internet browsing, gaming, social networking applications, emails, and multimedia play.
Following its acquisition by OCZ, Indilinx will continue to produce and supply its line of controller products to SSD manufacturers and OEMs on a global basis. The Indilinx controller business, and its 45 employees, will remain intact under the leadership of Bumsoo Kim, the founder and President of Indilinx, and Hyunmo Chung, Indilinx's Chief Technology Officer. OCZ will continue its own R&D program to develop new proprietary technologies and products to expand its own solid state drive offerings.
The Indilinx acquisition notwithstanding, OCZ plans to continue utilizing controllers from other manufacturers including long-term partner SandForce, who currently supplies SSD processors for a wide range of the Company's SSD products including the Vertex 2, Agility 2, RevoDrive, customizable Deneva enterprise drives, and the upcoming Vertex 3 family of SSDs.
"This transaction is an important step in OCZ's strategy and significantly enhances our ability to capitalize on the worldwide demand for Solid State Drives," said Ryan Petersen, CEO of OCZ Technology Group. "This combination brings together two organizations that are committed to advancing solid state drive design, and provides a unique opportunity for OCZ to increase both customer and shareholder value as well as expand our reach into embedded markets."
Under the terms of the agreement, OCZ will acquire Indilinx for approximately $32 million of OCZ common stock. Indilinx shareholders will own approximately 9.5% of the OCZ shares outstanding after issuance of the shares. The transaction has been approved by the board of directors of each company, and is expected to close within 30 days, subject to customary closing conditions, including regulatory approvals. OCZ expects the transaction to become accretive to its earnings per share toward the end of this fiscal year on a non-GAAP basis, excluding acquisition-related expenses, restructuring charges, and amortization of intangibles.
Ryan Petersen, CEO, will be a featured speaker at the Roth Capital 23rd Annual Orange County Growth Stock Conference today at 5:30 pm pacific time. To listen to the presentation and view the accompanying slides, please visit the investor relations events section of OCZ website at www.ocztechnology.com and click on the link provided for the web cast.
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