Imation Corporation said Wednesday that it has purchased a data-storage provider for about $120 million in cash and stock—a move that aligns with the increased focus it has recently placed on data storage and security.
 
The company being acquired, Thousand Oaks, California-based Nexsan Corporation, provides disk-based storage systems and has more than 11,000 customers worldwide. Oakdale-based Imation said that the purchase will help it capture a larger share of small and medium-sized business customers and boost its growth among enterprises with widely distributed operations.
 
The acquisition also expands upon Imation’s recent entrance into cloud-based services. Nexsan’s technologies aim to help organizations optimize traditional, virtual, and cloud computing environments—and Imation, which has long sold data-storage devices such as magnetic tapes and DVDs, last month launched two new services that allow businesses to store data on remote servers in an attempt to diversify its offerings.
 
The transaction included approximately $105 million in cash and 3.3 million Imation common shares, which equates to about $15 million.
 
“Imation’s acquisition of Nexsan is an exciting next step in our strategic transformation, which includes investing in growth platforms in data storage and security solutions, where we are targeting markets with strong growth rates,” Imation President and CEO Mark Lucas said in a prepared statement. “Our strategy includes focusing on the underserved [small and medium-sized business] market with purpose-built storage systems and appliances.”
 
Nexsan will continue to operate from its California headquarters under existing management. The acquisition adds about 200 employees to Imation’s work force; the employees are based in the United States, the U.K., and Canada.
 
Nexsan CEO Philip Black said in a statement that Imation provides his company the “scale and global footprint” to expand.
 
Nexsan’s 2011 revenues totaled $82 million and are continuing to grow, and its gross margins are in the 40 percent range, according to Imation.
 
Meanwhile, Imation reported a 2011 operating loss of $33.1 million, or $1.24 per share, on revenue of $1.3 billion. Net revenue for the quarter that ended in September totaled $248.2 million, and the company’s operating loss for that period was $6.3 million, or 17 cents per share. The company said Wednesday that it will release its fourth-quarter and 2012 financial results on February 13. (According to Bloomberg, Imation is projected to report its sixth straight year of net losses and fourth consecutive annual decline.)
 
Imation, which spun off from 3M in 1996, has been undergoing a series of changes in recent months. In October, on the heels of a third-quarter sales decline of nearly 20 percent, the company announced plans to restructure its business and cut its global work force by 20 percent—or about 226 people—in 2013.
 
Imation also said in October that in addition to increasing its focus on data storage and security, the company is exploring “strategic alternatives” for its consumer electronics businesses and brands, which include Memorex and TDK Life on Record.

Last January, Twin Cities Business explored what was behind Imation’s struggles, how it was progressing with its turnaround plan, and its prospects for the future—including whether it was time for the company to be sold, either in pieces or in its entirety. To read that story, click here.