Sphere 3D Buys RDX Storage Business From Imation for $6 Million

Highlights:

• Transaction will be accretive in this quarter for both revenue and gross margin;
• Market will benefit from centralized introduction of new features and capacity upgrades;
• Expands RDX market share in North America and Japan, to augment the existing strength in Europe;
• Provides greater control over the backup appliance components that form a key part of Sphere 3D's strategy to deliver comprehensive virtualization, storage and data management for on premise, cloud and hybrid infrastructures.

Sphere 3D Corp. announced that its wholly-owned subsidiary, Overland Storage, Inc., acquired the RDX removable disk product lines and existing inventory assets from Imation Corp., pursuant to an Asset Purchase Agreement, dated as of August 10, 2015, by and among Sphere 3D, Overland Storage and Imation.

The Imation RDX product lines generated approximately $14.5 million of revenue for Imation in the trailing twelve months as of June 30, 2015.

"The completion of our acquisition of the RDX product lines from Imation will accelerate our efforts to aggressively pursue the purpose-built backup appliance market which is a valuable differentiator in our reference architecture for our hyper converged infrastructure deployments," said Eric Kelly, CEO, Sphere3D. "With this transaction now complete, Sphere 3D can expand the current strong presence of our Tandberg Data business in Europe, while increasing sales in key geographies such as North America and Japan, as well as simultaneously strengthening our Global Channel Partner Network for backup appliance offerings."

According to IDC Worldwide Quarterly Purpose-Built Backup Appliance Tracker, the worldwide PBBA market got off to a strong start in 2015 with solid year-over-year revenue growth. Factory revenues grew 6.9% year-over-year totaling $719.3 million and capacity shipped reached 647PBs, an increase of 32.3% year-over-year in the first quarter of 2015.

"Sphere 3D's award winning and patented RDX removable disk technology, marketed and sold under our Tandberg Data brand, is the industry standard in enterprise-grade removable disk storage for backup, data protection and archiving, and is characterized by its very rugged design that allows the disks to be handled and transported while safely retaining data," said Nilesh Patel, VP of product management and marketing, Sphere 3D. "RDX-powered purpose-built backup appliances, like our new RDX QuikStation, are the ideal solution for Small-to-Medium sized businesses in highly regulated industries such as healthcare and financial services, where data must be secured, protected, archived and recoverable per government regulations. This acquisition also now makes available to our global partners our groundbreaking RDX+ software technology which is designed to increase storage capacities by 50% and more, providing all QuickStation and QuickStor appliance customers with future expansion to larger than 2TB capacity media."

As part of the agreement and to ensure a seamless transition for customers, Imation has agreed to provide certain customer support services through October 31, 2015.

Transaction Highlights
100% stock transaction valued at approximately $4.9 million plus the net value of existing inventory of approximately $1.4 million, based on the closing price of Sphere 3D common shares as of August 6, 2015.