Datto Acquisition: Key Details, Impact, and What Comes Next

Kaseya's acquisition of Datto for $6.2 billion marks a significant consolidation in the IT management and security software industry. This strategic move, funded by an equity consortium led by Insight Partners, aims to enhance Kaseya's platform with Datto's robust solutions, promising increased innovation and reduced costs for managed service providers (MSPs). The acquisition underscores the growing importance of integrated IT solutions in today's market.

What Is Datto?

Founded in 2007, Datto specializes in IT solutions tailored for Managed Service Providers (MSPs) and IT teams. Its core products include backup solutions, remote monitoring and management (RMM), professional services automation (PSA), and networking solutions. Datto differentiates itself with AI-powered technology, a cloud-first approach, and automation at scale. Its unified management and proactive issue resolution features ensure comprehensive data protection across on-prem, cloud, endpoints, and SaaS applications.

Who Acquired Datto?

Kaseya is a prominent global provider of IT and security management software, catering to Managed Service Providers (MSPs) and internal IT departments. The company offers a wide range of solutions, including remote monitoring and management (RMM), multi-layered cybersecurity, unified backup, and IT compliance tools. Kaseya is recognized as a market leader, known for its innovative IT Complete platform, which integrates various IT management tools to enhance efficiency and security for IT professionals worldwide.

When Was Datto Acquired?

Kaseya announced its acquisition of Datto on April 11, 2022, and completed the transaction on June 23, 2022. This strategic move came at a time when the IT management and security software industry was experiencing significant consolidation. The timing also aligned with the increasing demand for robust cybersecurity solutions and integrated IT management tools, driven by the shift to hybrid work models and the need for enhanced remote IT management capabilities.

Why Was Datto Acquired?

• Market Expansion: The acquisition of Datto by Kaseya significantly enhances Kaseya's market presence, allowing it to offer a broader array of technology products. This merger is expected to increase Kaseya's global footprint and customer base, positioning it as the largest MSP-focused software vendor globally.
• Technology Integration: Kaseya plans to integrate Datto's products into its IT Complete platform, with at least 17 workflow integrations planned within the first month. This integration will enhance the functionality and efficiency of Kaseya's offerings, providing a more comprehensive suite of IT management solutions.
• Competitive Advantage: The acquisition strengthens Kaseya's competitive position by combining the strengths of both companies. Kaseya plans to reduce the list pricing on all Datto technology by an average of 10% on new purchases, making its offerings more affordable and attractive. Additionally, the integration of Datto's innovative products and the retention of key Datto personnel will help Kaseya maintain high levels of customer service and product quality.

Acquisition Terms

• Acquisition Price: $6.2 billion
• Payment Method: All-cash transaction
• Key Conditions or Agreements:
  • Datto stockholders will receive $35.50 per share in cash.
  • The transaction values Datto at approximately $6.2 billion, representing a 52% premium to Datto’s unaffected stock price of $23.37 as of March 16, 2022.
  • The transaction is expected to close in the second half of 2022, subject to customary closing conditions, including regulatory approvals.
  • Shareholders holding approximately 70% of Datto’s issued and outstanding shares have approved the transaction by written consent.
  • Upon completion, Datto’s common stock will no longer be listed on the New York Stock Exchange.
  • Datto will continue to operate under its brand as "Datto, A Kaseya Company."
  • No layoffs will occur; instead, Kaseya plans to hire 1,000 more account managers.
  • Retention bonuses will be given out to key employees.
  • Key Datto leaders like Ryan Weeks and Rob Rae will stay on, while CEO Tim Weller will move on but remain in close communication with Kaseya's CEO.

Impact on Datto

The acquisition of Datto by Kaseya has led to several operational and management changes. Datto will continue to operate as an autonomous brand under the name "Datto, A Kaseya Company," with its headquarters in Norwalk, Connecticut, while Kaseya's global headquarters remains in Miami. Key leadership changes include the departure of Datto's CEO Tim Weller, while other leaders like Ryan Weeks and Rob Rae will stay on. Additionally, Kaseya plans to hire 1,000 more account managers to ensure continued customer service excellence, and Datto's stock has ceased trading on public markets.

In terms of product offerings and services, the acquisition promises significant enhancements. Kaseya plans to integrate Datto's products into its IT Complete platform, with at least 17 workflow integrations planned within the first month. Customers can expect substantial investments in upgrades and innovations, along with a reduction in Datto product prices by an average of 10%. Employee reactions have been generally positive, with assurances of no layoffs and the provision of retention bonuses. Customer reactions also appear favorable, with expectations of improved product quality, better-integrated solutions, and lower costs.

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