IBM Buys HA and Data Replication Software Maker DataMirror
Published: July 17, 2007
by Timothy Prickett Morgan
Private equity firm Thoma Cressey Bravo has been driving a wave of consolidation in the market for high availability and data replication software in the i5/OS and OS/400 server market since last fall, having acquired three of the four biggest players and merging them under Vision Solutions. In a surprising move yesterday, IBM, which has always been a strong partner with the makers of HA software for its proprietary server line, acquired the fourth big player in this market, DataMirror, for $161 million.
DataMirror is based in Markham, Ontario, which is fairly close by IBM's Toronto software development labs, where its DB2 database, various middleware packages, and a number of its compilers are created. DataMirror was founded in 1993 by Nigel Stokes, who is still the company's chairman, chief executive officer, and president. While DataMirror was established a number of years after Vision Solutions and another rival player, Lakeview Technology, were founded, in the 1990s DataMirror became one of the big three in the market for HA software for the OS/400 platform, and eventually went public on the Toronto Stock Exchange in 1996. DataMirror famously tried to do a hostile takeover of Vision Solutions a few years after that company was acquired by a publicly traded South African technology holding company called IDION Technology, but eventually divested itself of the shares that it owned.
According to Michael Curry, director of product strategy and management for IBM's Information Platform and Solutions division within its Software Group, the engine that is at the heart of DataMirror's iCluster HA software is also at the center of its Transformation Server and iReflect products--and it is a key technology that IBM has been looking to build or buy as it fleshes out its "Information On Demand" strategy.
"We were primarily interested in the change data capture and replication technologies," explains Curry. "The key functionality that we were looking for is the ability to sense changes in data sources and then deliver that changed data to a target."
Curry says that the DataMirror transformation engine also has the ability to do real-time analysis of the changed data and, based on a rules engine, it can perform a specific action on that data, such as creating a report or invoking some other action. The other thing that IBM found attractive about DataMirror's software is that it is mature, says Curry.
Curry estimates that among DataMirror's 2,200 customers, about half of them are using the software for disaster recovery, while the remainder are using it for replication or change data capture. By replication, HA software makers mean taking information from one database on one machine and applying it to a database on another machine; this replication can be between compatible databases or, with special transformation algorithms, between incompatible databases, such as DB2 and Oracle. This change data functionality, which has always been at the heart of HA software, moves information from a production system to a backup system that is set up to handle transactions in the event that the production system fails. IBM is very keen on using DataMirror's technology to extend its own Information Server data integration product, which is a combination of homegrown IBM technology and a bunch of code that Big Blue picked up when it acquired Ascential Software in March 2005 for $1.1 billion. (Ascential was the data integration company that was spun out of database maker Informix in April 2001 after IBM spent $1 billion to acquire the database business.)
Curry says that IBM and DataMirror have been talking about a deal for some time, but was not specific about when the talk got serious. With IBM in its quiet period before its second quarter earnings announcement on Wednesday and with DataMirror being a fairly small deal for Big Blue, the company did not host a conference call with press and Wall Street analysts to go over the deal--although IT analysts did get a briefing from DataMirror's Stokes and Jim Welch, vice president of the Information and Platform Solutions division inside IBM's Software Group.
As far as product integration plans go, Curry could not be specific because the deal has not been done yet. "None of the product plans have been finalized yet, since we are still in the approval process," says Curry. And for those who are wondering what IBM will do with the iCluster HA software products, there are no plans to stop selling iCluster. "iCluster was one of the technologies that was attractive to IBM," Curry says. iCluster competes against three different packages now available for the i5/OS and OS/400 platform from Vision Solutions--ORION, MIMIX, and iTera HA--as well as other products from smaller players in the HA and data replication space such as Maximum Availability, Trader's, and Bug Busters.
"IBM's global reach and industry leading integration solutions will rapidly expand the impact of DataMirror software," said Stokes in a statement announcing the acquisition. "This transaction represents a validation of the hard work of the DataMirror team over the last 10 years, and an opportunity for our customers to continue to leverage our unique solutions."
The $161 million that IBM offered DataMirror's shareholders represents about a 20 percent premium compared to last Friday's closing price for DataMirror shares on the TSE. DataMirror has 2,200 customers and about 15,000 licenses to its software distributed. DataMirror has spent over $100 million on research and development in the past 12 years, and has been bolstering its sales and profits in the past few quarters. In its most recent fiscal year, fiscal 2006 ended January 31, the company had sales of $44.7 million and a net income of $3.7 million. (Those figures are in U.S. dollars, as are all figures in this story.)
IBM expects the DataMirror acquisition to be finished sometime in the third quarter. IBM's intent is to keep DataMirror's 220 employees, and Stokes has agreed to stay on to manage the transition for an unspecified amount of time. IBM also has plans to create a center of excellence based on the DataMirror team devoted to data replication and change data capture. After the deal closes, IBM will talk about more detailed roadmaps as they relate to DataMirror's products.
DataMirror's Shows Continued Growth in the First Quarter
DataMirror Updates Transformation Server/ES
DataMirror Expands into New Digs and Operations in Europe
DataMirror Grows Revenues in Q4, Boosts Bottom Line Even More
DataMirror Offers Year-End iCluster Deal, Reports Sales and Profits Are Up
Vision Solutions Acquires HA Rival Lakeview Technology
Thoma Cressey Strikes Again: Buys iTera to Merge with Vision Solutions
Venture Capitalist Thoma Cressey Acquires Vision Solutions
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