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Consolidation Hits Storage Switch Market

McData scoops up Computer Network Technology in an all-stock transaction worth about $235 million.
Leading high-end storage switch vendor McData Corp. said today that it plans to acquire Computer Network Technology Corp. for around $235 million in a stock transaction. CNT is a top vendor of switches and other products for extending local storage networks across wide area networks, with a strong presence in Europe.

McData hopes the buy will bring it additional visibility overseas, and the vendors also expect increased efficiency in manufacturing and sales. Partners of the two vendors include Dell, EMC, and IBM.

CNT shareholders are expected to receive 1.3 shares of McData stock for every share of CNT stock they hold. And the CNT stockholders should end up holding around 24% of the value of the new company.

"There needs to be some consolidation in the market," says James Opfer, an IT analyst at Gartner. "With this acquisition, there's significant product overlap, but there are complementary customers."