Press Release

EMC Announces Agreement to Acquire McDATA Corporation, Leading Data Center Network Switch Developer

Strategic Investment In Colorado-based Technology Leader Positions EMC For Future Role in Networked Information Storage

Hopkinton,, Thursday, October 26, 1995 - 

EMC Corporation, the world's leading independent supplier of intelligent storage and retrieval technology, today announced an agreement to acquire McDATA Corporation, a leader in data center network switching solutions, in a pooling-of-interests stock transaction valued at approximately $230 million.

The transaction includes the acquisition of more than $50 million in McDATA working capital, most of which is cash and to be issued will be determined at the closing. Based on current market conditions, the acquisition of McDATA is expected to be accretive to EMC's earnings, adding 8-10 cents per share in 1995. Completion of this transaction is subject to several conditions, including appropriate regulatory review and approval of McDATA's shareholders. Subject to satisfaction of these conditions, the companies expect to complete the transaction during the current quarter.

EMC plans to operate McDATA as a wholly owned subsidiary. Jack McDonnell, McDATA President and CEO and one of the company's founders, will continue in his present role and report to Michael C. Ruettgers, EMC President and CEO.

Based in Broomfield, Colorado, McDATA Corporation is a privately held company specializing in high-bandwidth networking solutions for large-scale computing applications. Founded in 1982, McDATA has 150 employees and expects 1995 revenues to exceed $150 million. Its flagship product, the ESCON Director, is a high-speed fiber-optic-based network switch designed to connect computers and peripherals within today's data center. Marketed by IBM Corporation under an exclusive OEM agreement, the ESCON Directory has enabled McDATA to become the leading supplier of data entry network switching solutions. ESCON, or Enterprise Systems Connection Architecture, is IBM's fiber-optic based channel architecture for high-speed data communications between mainframe computers and associated peripheral devices such as storage systems.

"This acquisition will position EMC to play an even more critical role in helping customers establish information-centric computing strategies, as the processor-centric models to the past fade away," said Ruettgers, EMC President and CEO. "McDATA's communications expertise will help position EMC at the center of the networked data center and open systems worlds. We now have the opportunity to extend our market leadership in intelligent storage to the network and become the premier supplier of networked storage solutions for the entire enterprise."

"McDATA Corporation is a successful company with leading-edge technology, a strong management team, impressive technical talent, and significant financial strength," Ruettgers continued. "We believe McDATA's strategy complements EMC's. Like EMC, McDATA's most important technical expertise is in software. We expect McDATA to accelerate our growth into new markets as well as provide direct, immediate benefits to our revenue and profitability."

McDATA President and CEO McDonnell said, "This acquisition will enable EMC to capitalize on the burgeoning market for data center and open systems network switching solutions. McDATA's ESCON Director is the leading fiber-optic-based switch on the mainframe market today. Our core competencies, developed over the past 13 years, in high-bandwidth, high-speed connectivity can be leveraged to exploit future opportunities."

"Several technology trends are converging to drive the market for data center network switching solutions," McDonnell continued. "These trends include the explosion in storage capacity requirements; wide recognition of the greater need for centralized management of information; increase information sharing and access; migration to open systems computing; demand for higher-speed storage and retrieval solutions; and changes in the nature of information. Collectively, these trends point toward tremendous opportunities for EMC and McDATA to join together and capitalize on."

Ruettgers note, "EMC has pursued a strategy in recent years of complementing its strong, internally fueled growth with selected technology acquisitions that leverage and extend our own technology and build upon our presence in important, growing markets. This agreement is consistent with our strategy."

EMC Corporation, based in Hopkinton, Mass., is a world leader is enterprise-wide information storage and retrieval technology, designing systems for mainframe, midrange and open systems environments. The company has offices worldwide and trades on the New York Stock Exchange under the symbol EMC.

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