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Enterprise storage and security business Imation has agreed to buy smaller storage provider Nexsan for $120 million in cash and stock, it announced today.

Imation has struggled over the past six years to dominate in the enterprise storage market and has had five years in a row of net losses. (We expect 2012 will also be another year of losses.) Its acquisition of Nexsan could help reinvigorate the company, with new storage and security products targeting medium and small businesses.

“Imation’s acquisition of Nexsan is an exciting next step in our strategic transformation, which includes investing in growth platforms in data storage and security solutions, where we are targeting markets with strong growth rates,” Imation CEO Mark Lucas said in a statement. “Our strategy includes focusing on the underserved SMB market with purpose-built storage systems and appliances. This is a market that Nexsan knows well. Nexsan’s management team has grown this business from startup to more than $80 million, with strong gross margins.”

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The deal is worth $105 million in cash and 3,319,324 common shares worth about $15 million. Nexsan has 200 employees and generated about $82 million in revenue in 2011, with gross margins around 40 percent.

Thousand Oaks, Calif.-based Nexsan will continue to operate under the same management, with Nexsan CEO Philip Black becoming an Imation employee.

Storage concept image via Kletr/Shutterstock

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