Legato Systems Inc, the Palo Alto-based storage management firm, has agreed to pay $69m, or three times the market price, for FullTime Software Inc, formerly called Qualix Inc, of San Mateo. FullTime’s software products provide application and data availability in the event of sudden system failure or planned downtime, and the company’s chief executive, Rick Thau said that FullTime’s products fitted into a gap within Legato’s existing offerings. The all stock transaction will see Legato issuing 1.7 million shares, or around 4.7% of its issued share capital, representing 3.3 times the current market capitalization of FullTime. But Legato’s chief financial officer, Steve Wise said that FullTime’s products were considered by Legato to be one or maybe two levels ahead of the nearest competitive technology. Additionally, Rick Thau said his company’s battered stock price, which has been languishing around the $2 mark for the last three months, in no way represented the value of FullTime’s products, and he expects large synergies to emerge from the union. Thau said he would be actively involved in the business combination, after which he will be transitioning on to other, unspecified activities. Thau’s company changed its name after developing its ‘FullTime’ product which addresses the costs and problems associated with planned system downtime. Planned downtime occurs when companies upgrade hardware or software applications, and FullTime claims such interruptions are more costly than sudden, unexpected failures. A recent beta test of the product with giant business applications vendor SAP AG has now been completed and FullTime is optimistic about licensing its product to numerous SAP R/3 users for assisting with planned upgrades. Thau said Monday’s deal would help to reassure these kinds of large potential customers by giving the FullTime product a more credible future given his company’s shaky stock price. Legato’s share price dipped by nearly 13% on Monday to close at $35.13 but CFO Wise said the drop came late in the day in response to over exaggerated claims from a competitor, rather than in response to the acquisition news which was revealed before markets opened.
