Dell sells Mozy to Carbonite, here’s why
BOSTON- Carbonite CEO Mohamed Ali knows a good deal when he sees one. Yesterday, during the company’s earnings call with investors and industry analysts, he announced that Carbonite had entered into a definitive agreement to acquire Mozy from Dell EMC for $148.5 million in cash.
This is cash that Dell needs to help address the forthcoming $2 billion interest payment (estimated) it owes in connection to the $46 billion of new debt it incurred to help finance its acquisition of EMC in September of 2016.
Up until now that interest was deductible, but that changed with the new tax laws passed at the end of 2017, capping the amount of interest expense companies could deduct from their taxes at 30 percent of earnings before interest, taxes, depreciation and amortization.
The sale of Mozy should give VMware stakeholders a little room to breathe, for now, as Dell examines what more it can do to satisfy the underwriters of its debt. It had been rumored that VMware might be forced to acquire Dell in a reverse merger which sent VMware shares into a downward spiral . Dell owns 80 percent of publicly traded VMware.
Carbonite takes leadership of DPaaS marketplace
Mozy which was founded in 2015, at around the same time as Carbonite, provides online back-up and data protection services to consumers and businesses (MozyPro for end-points and MozyEnterprise for servers.) According to Mozy, it provides data protection services (DPaaS) to more than 10,000 organizations and 6 million people.
Carbonite does the same but primarily for individual PC and Mac users. Its market capitalization is just over $700 million.
In a press release Ali said, “Carbonite’s competitive advantage is our flexible data protection platform, which serves every scenario, from backing up individual laptops to maintaining uptime for hundreds of business servers. This deal provides Mozy customers scalable options for the future and gives Carbonite a broader base to which we offer our solutions.”
Though Ali has not said how this will affect Mozy’s customers, Carbonite’s typical post-acquisition practice is to rename the products it acquires and to then bring them into its brand. Mozy’s employees should expect some consolidation to occur, it is what happens in deals like this.
