Hit #36

SunGard Data Systems (SDS) is to be acquired by a group of seven private equity firms for $11.3 billion in cash. This is much higher than the price rumored last week.

The deal values SDS at $36/share, a 32% premium over my average cost of $27.23/share. I own a very small number of shares, since I didn't get a chance to add more during the recent pullback.

With this deal, we have now reached a point where private equity groups are willing to overpay - just to avoid costly litigation ?

One particular disappointment here is that someone like EMC did not show any interest in SDS's disaster recovery and data availability services.

Coming as it does after Veritas's buyout by Symantec, this is a sure indication of the storage stocks being undervalued.

Two others to watch are Dot Hill Systems (HILL) and Overland Storage (OVRL). Dot Hill is very attractive right now; I have been buying regularly. Overland looks fairly valued after their most recent warning - I am planning to add some.