Stratus Technologies Acquired By Investor, Plans Fault-Tolerant Software, Cloud Push

Fault-tolerant hardware and software developer Stratus Technologies has been acquired by an investment firm, paving the way for the company to reduce debt and invest in new ways to bring its technology to software and private cloud environments.

Stratus Technologies on Monday signed a deal to be acquired by Siris Capital Group from its current investors, including MidOcean Partners and others, for about $352 million, said Nigel Dessau, CMO of the Maynard, Mass.-based server and software vendor.

Stratus Technologies has been owned by a number of private equity companies since 2000, and was in the midst of having to refinance loans, Dessau said.

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"As part of the process, we talked to several companies, including Siris," he said. "They said, 'Let us be a part of the team, and instead of a loan, we'll restructure the company."

The acquisition by Siris Capital Group should have little impact on Stratus Technologies, Dessau said. "But it puts in place a foundation that in the future will lead to lower debt and higher equity in the company," he said.

Privately held Stratus has annual revenue of about $200 million, with EBITDA (earnings before interest, taxes, depreciation, and amortization) of about $50 million, Dessau said.

While Stratus Technologies has been best known as a developer of x86-based fault-tolerant servers that promise 99.999-percent uptime, the company is currently investing heavily in the software and private cloud side of the business, Dessau said.

That investment is based, in part, on technology that came with Stratus' 2012 acquisition of Marathon Technologies, which developed software that turned two x86-based servers into a fault-tolerant solution.

Stratus last month combined its own Avance software and the ex-Marathon everRun application to form everRun Enterprise, which Dessau said brings the same level of high availability from its hardware business to the software side using industry-standard servers.

"EverRun provides mainframe-type availability," he said. "It's really the first time an industry-standard platform can bring mainframe-type services to the x86 server business in terms of availability."

The acquisition of Stratus is another milestone in that company's evolution, said Scott Gorcester, founder and CEO of VirtualQube, a Woodinville, Wash.-based cloud services provider that started working with Marathon in the 1990s.

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Gorcester, whose company started working with Stratus after that vendor's acquisition of Marathon, said he expects no real change in how Stratus works with the channel after being acquired by Siris.

"There was no big change when Stratus acquired Marathon," he said. "A good many of the people we worked with over the past decades have transitioned."

Gorcester said he has always been impressed with Marathon's and now Stratus' everRun technology. "It's always worked as advertised," he said. "And support is excellent. It has to be. The promise of everRun is uptime. We don't expect downtime with these solutions."

Stratus' fault-tolerant server business continues to grow, albeit at the same single-digit growth rate of the server industry, in general, Dessau said.

The company is investing heavily on the software and cloud side, with cloud being a real growth opportunity, he said.

"EverRun makes virtual servers run continually," he said. "The cloud is really a large number of virtual servers. We've announced we're developing cloud solutions for customers building private clouds using OpenStack."

PUBLISHED MARCH 31, 2014