Vision to Buy Double-Take for $242 Million

Published: May 18, 2010

by Alex Woodie

Vision Solutions yesterday announced that it has entered into a definitive agreement to acquire Double-Take Software, a developer of high availability software for Windows and Linux, for $10.55 per share, or $242 million. By acquiring its partner, Vision would gain a strong foothold in the Windows and Linux HA market, to complement its strong portfolio of HA products in the IBM i/OS space.

Double-Take Software is a publicly traded company (NASDAQ ticker symbol: DBTK) that has struggled to regain its footing after the global economic crises erupted soon after its IPO in late 2006.

The company, which is based in Southborough, Massachusetts, lost $227,000 during the most recent quarter ended March 31, on revenues of $18.9 million. That was down from a $45,000 loss on revenues of $18.2 million during the same quarter a year ago. Its stock price has fluctuated between the $5 and $10 marks for the past year, unable to ride the overall climb in stock prices anywhere near its peak level in the low $20s during the go-go days of late 2007. (Despite Double-Take's struggles, the company ended the first quarter of 2010 with nearly $120 million in total current assets, against about $33 million in total current liabilities.)

The company has been "reviewing strategic alternatives" with its legal and financial advisors for the past several months, Dean Goodermote, chairman, president, and CEO of Double-Take, said in a statement. "Our board of directors and the management team are extremely pleased to announce this transaction and look forward to developing and supporting innovative recovery solutions for our clients globally," he said.

The specter of combining Double-Take's respected HA and DR solutions for the Windows and Linux markets with Vision's considerable expertise in the i/OS HA and DR markets was too great for Vision's owner, the private equity firm Thoma Bravo, to pass up. Through the acquisitions of iTera and Lakeview Technology in 2006 and 2007, respectively, Thoma Bravo (called Thoma Cressey Bravo for the Lakeview deal but just Thoma Cressey for the iTera deal) steered Vision into becoming the dominant provider of i/OS HA software, and now it appears that it's looking to do the same to own a slice of the X86 HA and DR markets, too.

"Double-Take has built a strong worldwide information availability business, and we are excited to have its world-class employees, customers, and partners join the Vision family," Nicolaas Vlok, president and CEO of Vision Solutions, stated in a press release. "With our expanded resources and scale, we will increase our ability to innovate and be the solution provider our customers can count on for their information availability needs."

Vision is no stranger to Double-Take or its solutions. The Irvine, California, company has been an OEM partner of Double-Take's for years. Vision's Web site currently lists a Double-Take HA product, called "Double-Take for Windows," as part of the Vision portfolio.

Double-Take's flagship product, Double-Take Availability, will mesh nicely with Vision's collection of i/OS products, including iTera HA, MIMIX, and Orion. Double-Take Availability has been in development since 1995, and the developer (which was formerly called NSI Software) has continuously enhanced the software and branched into other areas. Recently, Double-Take has spread into the adjoining HA disciplines of continuous data protection (CDP), cloud-based DR, and database and application migrations, which are also areas of interest to Vision.

Double-Take had 22,000 customers at the end of 2009, including many law firms, financial institutions, hospitals, school districts, and government entities, according to Double-Take's annual report for 2009, which was released in March 2010. This customer base will provide some diversity to Vision's i/OS installed base, which is dominated by large and midsize banks, insurance companies, retailers, manufacturers, and distributors.

Double-Take goes to market through the combination of a large network of resellers and a direct sales force, as well as OEM agreements with vendors like Vision. It also enjoys close partnerships with X86 juggernauts like Microsoft, Dell, HP, and VMware.

Under the terms of the agreement, Double-Take stockholders will receive $10.55 per share of common stock, which represents a premium of about 21 percent compared to firm's closing stock price on April 9, which was the day that Double-Take announced its board was considering selling the company.

The deal is contingent on approval from the Double-Take shareholders; the company's board of directors gave its unanimous approval. The deal is also subject to the Hart-Scott Rodino waiting period. Double-Take says it expects the transaction to close in the third quarter of 2010.

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