Overland Storage, Sphere 3D To Merge In Virtualization, Storage Plan

Storage and backup appliance vendor Overland Storage is merging with application and desktop virtualization technology developer Sphere 3D in a move that will see Overland Storage, itself a melting pot of storage vendors, disappear into history.

San Diego-based Overland Storage late Thursday said it and Mississauga, Ontario-based Sphere 3D have signed an agreement to merge to form a global virtualization and data management software company under the name Sphere 3D.

Each share of Overland Storage will be exchanged for about one-half share of Sphere 3D, giving Overland Storage shareholders about 29 percent of Sphere and giving Overland Storage an implied value of just over $81 million. On a per-share basis, that equates to a 53 percent premium for Overland Storage.

[Related: Overland Storage To Acquire Tandberg Data, Create $100M Data Protection Powerhouse]

Eric Kelly, president and CEO of Overland Storage, is also chairman of the board of Sphere 3D.

The two companies have been partnering to develop an integrated application virtualization and data storage solution to allow third-party applications to be delivered both via the cloud and on premise. They also have been partnering on developing virtual desktop solutions, the two companies said.

The deal has Overland Storage channel partners scratching their heads and hoping it doesn't mean a change in the vendor's storage business.

Overland Storage has done great as a tape library supplier, but not so well as a provider of disk-based storage and backup devices, said Tim Neary, owner and president of Strategic Storage Solutions, an Allen, Texas-based solution provider and Overland partner.

Neary said he has not seen a lot of success for Overland Storage with its Snap and Ultamus disk products, and is not sure how the company will do in the virtual desktop infrastructure (VDI) market, despite the growth being experienced by that market.

"I'm a little confused about what their message is," he said. "To me, Overland is a great tape company. I hope they stay focused on it. Tape is still a big market. Tape is not dead."

John Zammett, president of HorizonTek, a Huntington, N.Y.-based solution provider and Overland Storage channel partner, said the vendor is still a major partner, and that he hopes it remains so after the merger.

"I hope they continue to provide good products to serve our existing customers," Zammett said. "Most importantly, I hope they continue to be a good partner for the channel."

Overland Storage itself is a company which, over time, has changed considerably as a result of acquisitions.

Overland Storage in late 2013 acquired Tandberg Data to become a $100 million data protection powerhouse. Prior to that, Overland Storage in 2008 acquired the Snap NAS line from Adaptec in a $3.6 million cash deal.

The company has since then continued to beef up the Snap NAS line with many of the features found in enterprise-class storage lines.

Overland Storage did not respond to a request for more information.

PUBLISHED MAY 16, 2014