Rumors had been flying for some time about SimpliVity needing additional funding, and that HPE had made an offer that was unacceptably low at $650 Million. Clearly, these were more than casually well-informed rumors, since HPE announced on January 17 that it would be acquiring SimpliVity for $650 Million in cash. Was this a fair price? That is hard to say. Since I’m not really an equity analyst, I will spend no more time on this other than to say that it is far short of the kinds of valuations that the industry was expecting. Competitor Nutanix’s current market capitalization is slightly over $4B, which is more than a bit rich for such a company. Despite its high growth rates, it has yet to turn a profit.
But pricing aside, was it a smart move for HPE? Absolutely. It’s probably the smartest acquisition that HPE has done in its entire history, and certainly one that helps shatter the perception that HPE always overpays for its acquisitions, even when they are strategically sound. SimpliVity was essentially tied for first place in our recent Forrester’s recent Wave™ report on Hyperconverged Infrastructure Solutions, coming in substantially stronger than HPE’s own HC380 product.
The fit with HPE for SimpliVity’s solution is impressive because: