This morning’s GMT story has been updated at the bottom...
Big cloud data management channel players Cohesity and Veritas are coming together, after news broke last night that newer player Cohesity was acquiring the “data protection business” of legacy firm Veritas.
In an interview with Reuters, Cohesity CEO Sanjay Poonen revealed the cash and shares deal, which is said to value the combined company at $7 billion.
Softbank-backed Cohesity planned an IPO in 2021, but that was put on ice because of lower float market valuations generally. That said, fellow cloud data management newbie Rubrik is said to be currently planning an IPO.
Veritas is majority-owned by private equity firm Carlyle Group. The fact both firms are private, and the deal only became public last night in the US, means it is perhaps no surprise there is no official statement about the deal on either company’s website at the moment.
That will cause slight confusion in the market today, as Reuters reports that the Veritas name will live on, as it says “Veritas will form a separate company that will comprise its remaining businesses, including data compliance and backup services”.
Up to now, most major cloud data management market players have sought to offer a combined data protection, data compliance and data backup platform. Indeed, data backup has been the mainstay in which major players have built on top of.
The potential confusion around the deal has not been missed by some of Cohesity’s and Veritas’ cloud data management rivals.
Sarv Saravanan, chief customer officer at Commvault – one of Veritas’ main rivals in the legacy on-premise data backup days – said: “This deal between Cohesity and Veritas could create complete chaos for customers.
“Platform integration challenges and redundant product portfolios could take years to address. With cyber attacks increasing in severity and frequency, there’s no time for that. Customers need to know if they’re hit, they can recover fast. In today’s world, cyber resilience equals business resilience.”
Who knows, maybe CEO Poonen should have made sure all the official ducks were lined up before speaking to journalists?
UPDATE at afternoon GMT, from Cohesity/Veritas official announcement:
Sanjay Poonen will lead the combined organisation as CEO and president. Greg Hughes, CEO of Veritas, will serve as a board member and strategic advisor to Poonen after the close of the transaction.
“The combined company will continue to invest in and advance the roadmap and strategy of all Cohesity products and services, as well as Veritas NetBackup, NetBackup appliances, and Alta data protection offerings, while working towards the delivery of an integrated solution combining the best technology across the two companies,” Cohesity said.
Poonen added: “This deal will combine Cohesity's speed and innovation with Veritas’ global presence and installed base. This combination will be a win-win for our collective 10,000 customers and 3,000 partners.
“Existing products will continue to be supported for many years while leveraging joint best-of-breed technologies to provide the most innovative roadmap.
“We are deeply committed to both Cohesity and Veritas customers, partners, and employees as we accelerate customer-driven innovation as one company.”
On a pro forma basis for the fiscal year ending July 2023, the combined entity had revenues of over $1.6 billion, annual recurring revenue (ARR) of $1.3 billion, and a 27% adjusted cash EBITDA margin.
The transaction has been unanimously approved by each of Cohesity's and Veritas' boards of directors and is expected to close by the end of 2024. Cohesity will finance the transaction through a combination of equity and debt.
The combined company will receive support from current investors, including Softbank Vision Fund, Sequoia Capital, Wing Venture Capital, Premji Invest, and others. Existing Veritas shareholders, including majority owner Carlyle, will become Cohesity shareholders upon the closing of the transaction.
The remaining assets of Veritas' businesses will form a separate company, “DataCo”. DataCo will comprise Veritas' InfoScale, Data Compliance, and Backup Exec businesses, and will function autonomously. DataCo will be led by CEO Lawrence Wong, currently senior vice president of strategy and products at Veritas.
