One Less Storage VAR: SANZ To Acquire Solunet, dba StorNet

Officials of Storage Area Networks, a publicly listed solution provider trading over the counter under the name SANZ, this week said the company has reached an agreement-in-principle to merge with Solunet.

Solunet does business as StorNet Solutions, an Englewood, Colo.-based storage solution provider. It is owned by Sun Capital Partners, a leveraged buyout company based in Boca Raton, Fla.

After the merger, Sun Capital is expected to hold a majority interest in SANZ.

The final agreement and terms are expected in the next few weeks, said Hugh O'Reilly, senior vice president of SANZ.

There are two key drivers to the merger, said O'Reilly. The first is an expanded geographic footprint. Both companies are based in the Denver area. SANZ has a presence in Arizona, Colorado, Connecticut, Massachusetts, New Jersey, Ohio, and Washington, D.C. Solunet has operations in Georgia, Washington, California, Texas, Ohio, Pennsylvania and Washington, D.C. "We will now pretty much own the Northeast, from Virginia to New England," he said.

Furthermore, the combined company can result in a more efficient operation by cutting back on administrative costs and improved purchasing capabilities, O'Reilly said. The two also have a fairly good overlap in terms of technology partners, especially their relationships with StorageTek, he said.

SANZ has struggled for some time to become profitable, and had yet to do so by the end of the third quarter of 2002, the last quarter for which it published results, said O'Reilly. "We have been trying hard to get to the break-even line," he said. "But the combination with Solunet will help drive economies of scale."

In January of last year, SANZ finalized its acquisition of ITIS Services, a 26-person storage solution provider with operations in Connecticut and Boston.