Deal-Happy CA Spends $350 Million on Nimsoft


What does CA (CA) stand for? How about "Cloud Addicted?" Over the past year, the company has focused on the so-called cloud-computing space through aggressive acquisitions. Businesses are increasingly moving towards this approach because of the ease-of-use, lower costs and improved collaboration.

And yes, CA made yet another acquistion this week -- it's a big one. The company has agreed to pay $350 million in cash for Nimsoft. The deal is expected to close at the end of this month.

While CA is known for being price-sensitive, this does not appear to be the case with the Nimsoft deal. The transaction comes to a hefty 10 times revenues.

Targeting Mid-Market Customers

Founded in the late 1990s, Nimsoft is now a top developer of technologies for networks, servers and application monitoring. Such things are extremely important for companies that use cloud-computing approaches since it gets tougher to integrate technologies, and data may be scattered in different locations.

What's more, Nimsoft has had lots of traction with mid-market customers (also called the emerging enterprise space). These are companies with roughly $300 million to $2 billion in revenues. According to CA, this market will account for 25% of information technology (IT) spending by 2013.

In other words, CA is making a bold attempt to go beyond its traditional big-market focus. And while this can be risky, it is really critical if the company wants to grow.

In fact, CA will also maintain Nimsoft as an independent division, which should be a big help. This strategy worked quite well with its Wily Technology acquisition in 2006.

So far, Nimsoft has more than 800 customers, including over 300 managed service providers (MSP). This MSP segment is quite attractive since they essentially provide broad outsourced IT services to mid-market customers.

Building Up the Cloud Platform

Along with the Nimsoft deal, CA has built up its cloud platform with a variety of other transactions. These include NetQoS (develops network performance services), Cassatt (provides data center solutions), Oblicore (helps manage cloud-based service contracts) and 3tera (allows for easy deployment of cloud applications).

No doubt, CA has the challenge of integrating these technologies -- but the company has a long history of putting together M&A deals. Besides, the market opportunity for cloud computing is enormous.

At the same time, CA will be expanding its lead against its main rivals, which include IBM (IBM), BMC (BMC) and HP (HPQ). All in all, these firms have been fairly lackadaisical so far and will likely need to play catch-up -- which means even more deal-making in the future.