Sand Technology Systems International Inc, the Montreal-based database and OLAP software company, is to sell its 40% share in Hitachi Data Systems Inc, the Canadian arm of Hitachi Data Systems Corp, back to the parent company. The stake is worth around $4.78m in US dollars, in addition to the $2.7m in dividends paid over the last two years. Sand’s cooperation with Hitachi over its Nucleus data warehousing technology will continue, the two said.

Sand ended up with a stake in Hitachi’s Canadian arm following Hitachi’s acquisition of National Advanced Systems, a subsidiary of National Semiconductor Corp, back in September 1989. Sand, which originally sold tapes and disk drives to the mainframe market, had a joint venture with NAS at the time. As the Canadian mainframe market declined, Sand went on to develop Nucleus, a combined relational database management system and query engine optimized for large amounts of unstructured data which began life at Lockheed Corp in the early 1990s. Hitachi agreed to distribute the product in the US, Canada and Australia. Sand finally got Nucleus to market in mid-1997, and Hitachi used it as the basis for its Nucleus Series of intelligent data storage products.

But earlier this year, Sand was forced to re-evaluate its Hitachi relationship after it signed a joint technology and OEM agreement for enterprise-storage subsystems and storage area networking markets. It said the implications of the agreements would have a major impact on the future hardware and maintenance sales results of Hitachi Data Systems Canada. Hitachi says it is becoming more solutions oriented, and plans to supplement its direct sales model with indirect sales. Sand says that now is the time to realize its investment, and will use the additional capital to boost is marketing and development efforts around Nucleus. It recently expanded its business relationship with IBM Corp under which Nucleus is sold in conjunction with DB2. Sand also sells systems through Compaq Computer Corp, an agreement inherited from Digital Equipment Corp. á