Data protection and management company Cohesity has confirmed an agreement to acquire Veritas’ data protection business.
Veritas, which private equity firm Carlyle acquired from Symantec in 2015 for $7.4 billion, provides data protection and management products. The company is considered a traditional data protection vendor that has moved to the cloud with Alta. The CEO is Greg Hughes. Cohesity, led by CEO Sanjay Poonen, was founded by Mohit Aron in 2013 and has raised a total of $660 million in funding. The company offers data protection and cyber recovery software as a cloud service. There is also a CS5000 HCI data protection appliance product line.
“This agreement combines Cohesity’s speed and innovation with Veritas’ global presence and installed base,” Poonen said in a statement. “This combination will be a win-win for our 10,000 customers and 3,000 partners. I can’t wait to work with the Veritas team to realize our vision.”
“By combining the best of both product portfolios, Cohesity’s scale-out architecture, which is ideal for modern workloads and powerful generative AI and security capabilities, and Veritas’ extensive workload support and critical capabilities. We are leading the way in the next era of AI-powered data security and management, with a global presence, particularly in the Global 500 and large public sector organizations.”
Cohesity’s Turing initiative includes generative AI partnerships with Google Cloud and the Vertex AI platform to build and scale machine learning models. Cohesity is extending this effort by collaborating with AWS Bedrock to generate business context-aware answers in response to user requests and questions.
Veritas’ data protection business is estimated to be worth more than $3 billion, including debt. To pay for this, Cohesity has raised about $1 billion in equity and $2 billion in debt from a group of investors including Haveli Investments, Premji Investments and Madrona. The combined valuation of Cohesity and Veritas’ data protection businesses is reported at $7 billion.
The companies say the new company will have annual revenues of $1.6 billion.
The transaction is expected to close by the end of 2024 and will see Carlyle assume or retain an ownership stake in Veritas’ data protection business and join Veritas CEO Hughes on Cohesity’s board of directors.
Carlyle will transfer the remaining Veritas businesses, including data compliance and backup services, to the new company.
Sarv Saravanan, Chief Customer Officer, Commvault, said: “This deal between Cohesity and Veritas could result in complete disruption for customers. Platform integration challenges and redundant product portfolios could take years to resolve. With increasing frequency, we don’t have time for that. Customers need to know that if they are harmed, they can recover quickly. In today’s world, cyber resilience equals business resilience.”
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This agreement is a game-changer for data protection and cyber resiliency. Poonen will become Cohesity’s CEO in August 2022, and the merger will put his stamp on Cohesity, which is technically still a startup.
The data protection and cyber resiliency market is roughly divided into three supplier groups.
- Traditional players: Commvault, Dell, IBM, Veeam, Veritas
- Fast-growing new products: Cohesity, Druva, HYCU, Rubrik, and more
- Mature players: Arcserve, Asigra, NAKIVO, HPE’s Zerto, and many more
Cohesity’s strong rival Rubrik is reportedly eyeing an IPO, and Veeam is sure to do so in the future. Cohesity filed for an IPO in December 2021, but it did not materialize. Once the Veritas acquisition is completed and the business’s earnings are healthy, the company could consolidate its position in the 2025/2026 period. Perhaps the company that combines Cohesity and Veritas’ data protection and cyber recovery businesses will become one of the largest players in the data protection market.
New businesses will involve a lot of business and technology integration and integration. For example, I’ve heard that Cohesity’s CS5000 hyperconverged protection appliance will get a Veritas software IP and will be offered as an upgrade to Veritas’ customer base. Clearly, a single management function and perhaps a combination of data protection mapping and weakness identification functionality is required.
This is the first major consolidation move in the fragmented backup industry. Competition for position is likely to become even more intense as other traditional incumbents seek to partner with aggressive, fast-growing new players to secure their positions in the evolving market.
