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UAE start up Sphere Networks to be bought out

Major Taiwanese OEM set to buy UAE-based start-up enterprise network management company Sphere Networks

UAE start up Sphere Networks to be bought out
Hamedi says that a buyout was always a likely eventuality in the company’s strategic planning.

Sphere Networks is currently in buyout talks with a major Taiwanese manufacturer to sell off the majority of the company, including the intellectual property rights to its network management software technology, supporting research and development team.

Although the company would not disclose the name of its potential suitor, Mohamed Hamedi, CEO and founder of the start up networking technologies firm, said that the potential buyer is "the largest OEM hardware manufacturer for networking equipment" in Taiwan.

Sphere Networks developed enterprise-level network management solutions, that allow organizations to monitor and control thousands of nodes at any one time.

The company was launched in 2005 by Hamedi, who personally bankrolled the company. In 2006 DSOA invested in the start up, followed by a cash injection from Intel Capital in 2008. The values of the investments were not disclosed at the time.

"Any start up company is going to have two exits," said Hamedi. "They are going to get acquired, or they are going to IPO, and right now is not exactly a very good IPO climate, so a merger or an acquisition is perfect and it is something that we selected with Dubai Silicon Oasis Authority (DSOA) and myself and Intel. It is part of the plan to basically exit the company and then take it to the next level."

He revealed that the buyer produces switches, routers, access points and similar products and that its core business is making products for other vendors. Now it wants to start focusing on producing its own-brand products and it is for this reason that Sphere Networks has fallen on the company's radar, as the buyout will supposedly help it complete the software and functionality side of its portfolio.

After the official announcement Sphere Networks will be enveloped into the purchasing company including its IP and technology and supporting technical resources which amounts to almost 20 employees. However, Hamedi explained that staff that work in the sales and human resources side of the business will be cut as a result of the merger.

"Given our product is aimed at the enterprise level and is less of an SMB [product] - and considering the structure of the Middle East with large governments and strong SMB markets - our products better suit the European or the US market," explained Hamedi.

He maintains that creating a company in the Middle East to target enterprise end-users in other markets was a strong strategy and upholds the fact that the merger has been a long time in the coming. He also denies the suggestion that support for local developers of IP is low on the ground here.

"We wanted to create a company where we could build the technology and then sell it outside [the region]. So it was a very cost effective development base, being in [the region] and having access to strong resources and strong talent and building it from here and selling it out to the European market," concluded Hamedi, who will continue to work with Sphere networks for up to 18 months part of an earn out agreement. 

Dubai Silicon Oasis Authority, which is involved in supporting local technology start ups in the UAE, was unavailable for comment.

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