Hewlett Packard Enterprise Co said it would buy data storage provider Nimble Storage Inc for $1.09 billion in cash, to expand its presence in the fast-growing flash storage business.
HPE Chief Executive Officer Meg Whitman has been focusing on a few areas such as networking, storage and technology services since the company was spun off from Hewlett-Packard Co in 2015.
Nimble Storage's shares rose 45.3 percent to $12.50, matching HPE's offer price. HPE's stock was marginally down.Also read: Microsoft And Pluralsight Partner to Upskill Developers Using Microsoft Visual Studio 2017
The $1.09 billion deal value is based on Nimble Storage's outstanding shares of about 87.5 million as of Nov. 30, according to Reuters calculations.
HPE also agreed to assume or pay out Nimble's unvested equity awards with a value of about $200 million at close.
Nimble makes hybrid storage devices that combine hard disks and flash drives. The company's larger rivals include NetApp Inc and Dell's EMC Corp.
Nimble Storage's entry- to mid-range flash-based products will help HPE cater to customers across all segments, the company said on Tuesday.
"The company can bring Nimble's operations to scale more quickly," Mizuho Securities analyst Abhey Lamba said in a note.Also read: Hyperloop One Reveals First Images of Nevada Desert Development Site 'DevLoop' at Middle East Rail
The overall flash market, estimated at about $15 billion in 2016, is expected to expand to nearly $20 billion by 2020, according to research firm IDC.
Sales in HPE's storage business fell 13 percent in its latest quarter. The company has also cut its full-year profit forecast.
The deal is expected to add to HPE's earnings in the first full fiscal year following the close, likely by April.
"While accretive, however, we do not think the deal is likely to move the needle for investors," Lamba said.
Nimble, founded in 2007, also reported fourth-quarter revenue above estimates and a smaller-than-expected quarterly loss.
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