Isilon Systems Said to Seek Buyers for Possible Company Sale

Frank Quattrone
Former Credit Suisse Group investment banker Frank Quattrone leaves federal court in Manhattan on Aug. 22, 2006. Photographer: Emile Wamsteker/Bloomberg

Isilon Systems Inc., the maker of devices used to store video, audio and digital images, is seeking bidders for a possible sale, according to two people briefed on the matter.

The company hired Frank Quattrone’s Qatalyst Partners to canvas would-be acquirers, said one of the people, who declined to be identified because the plans haven’t been made public.

Isilon, based in Seattle, is seeking to emulate the bidding war that surrounded rival data-storage maker 3Par Inc., both people said. 3Par’s plans to sell itself led to an 18-day tussle between Hewlett Packard Co. and Dell Inc. HP won out last month with a price of $2.35 billion, or $33 a share, triple 3Par’s stock price before the public bidding began.

Qatalyst served as 3Par’s financial adviser, while Wilson Sonsini Goodrich & Rosati provided legal advice. Sally Palmer, a spokeswoman for Qatalyst, wasn’t immediately reachable for a comment.

Only 1 percent of deals involving publicly traded companies in the technology industry result in bidding contests, Drew Guevara, head of West Coast Technology Investment Banking for Morgan Stanley, said Sept. 30 at a Bloomberg LP Dealmakers Summit in New York.

Isilon Chief Executive Officer Sujal Patel declined to comment on whether the company is trying to shop itself.

“My focus is on building a big company,” Patel said in an interview. “We have a huge opportunity, and we intend to go after it.”

‘Name That Comes Up’

Isilon has a market value of $1.52 billion. Its stock has more than tripled this year on speculation it may be a takeover target. The shares gained 83 cents to $23.11 yesterday in Nasdaq Stock Market trading.

“Isilon is definitely a name that comes up” in talk about data-storage market acquisitions, said Rajesh Ghai, an analyst at ThinkEquity LLC in San Francisco, who recommends buying Isilon shares.

Dell’s failed attempt to land 3Par makes it a likely suitor for Isilon, Ghai said.

An e-mail request for comment sent to Dell after regular business hours yesterday wasn’t immediately answered.

Isilon, which turned its first quarterly profit last year, posted sales of $45.1 million in the second quarter, a 56 percent increase from a year earlier.

“You don’t have to do anything when you are growing as fast as we are and have such a large market opportunity,” Patel said, referring to mergers and acquisitions. “We are the No. 1 publicly owned growth story in the storage business.”

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