SunGard to Split Off Availability Services Business

Sungard Availability Services, which supplies disaster recovery and business continuity services, was at the conference with mobile units that can be used in the event of a disaster. (Photo by Colleen Miller.)

Sungard Availability Services, which supplies disaster recovery and business continuity services, is being split off to parent company SunGard’s investors. SunGard AS can deliver services using mobile units that can be used in the event of a disaster, like this one displayed at the Gartner Data Center conference. (Photo by Colleen Miller.)

SunGard Data Systems will split off its Availability Services business, which operates its data centers and disaster recovery business. The Sungard  Availability business unit will be spun off into a separate company to its existing stockholders, including its private equity owners, in a tax-free transaction. The new company will continue to use the SunGard Availability Services name. SunGard says customers should see no impact from the change.

Both SunGard and SunGard Availability Services will continue to be owned principally by the consortium of private equity investment funds from Bain Capital, The Blackstone Group, Goldman Sachs, Kohlberg Kravis Roberts, Providence Equity Partners, Silver Lake and TPG, which acquired SunGard in a leveraged buy-out in August 2005.

With annual revenue of over $4 billion, SunGard is one of the largest privately held IT software and services companies. SunGard Availability Services provides disaster recovery and managed IT services, operating approximately five million square feet of data center and operations space.

“Greater Clarity and Alignment”

“This separation will bring greater clarity and alignment to each company’s mission,” said Russ Fradin, SunGard’s president and chief executive officer. “We believe a strategic separation of SunGard into two financially strong, independent companies will allow each to better focus on its distinct type of business and better pursue its own growth opportunities. While both businesses have been together as part of SunGard for a long time, they serve vastly different customer needs and have very different business profiles, with distinct capital requirements, sales forces and competitors.

“We are confident that two more focused and autonomous companies – each with significant size and capabilities – will be better positioned to drive long-term growth and value for customers, employees and investorsm,” said Fradin. “Both companies have compelling value propositions and growth opportunities as well as industry leadership positions, strong customer relationships, experienced management teams and specialized workforces. With each company having a strong footing from which to build and years of experience running independent operations within SunGard, the split-off should not have any impact on customers.”

Andrew Stern, currently chief executive officer of SunGard Availability Services, will become CEO of the independent company after the separation.

“We’ve made great progress at SunGard Availability Services to broaden our portfolio beyond traditional disaster recovery, with significant growth in our Cloud, Recovery-as-a-Service (RaaS), and Enterprise Managed Services businesses,” said Stern. “Customers around the world now rely on SunGard Availability Services to help ensure the availability of the IT systems, data and infrastructure that are critical to their business. As an independent company with $1.4 billion in revenue, we will have the scale, services and focus to continue bringing unique solutions to our customers’ availability challenges.”

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About the Author

Rich Miller is the founder and editor at large of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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One Comment

  1. Joe

    In you option does a spilt of this kind make the company easier to sell? Is there other reason for the spilt that they wont tell us about? Thanks!