News

posted on 22 April 2008 09:15

WAN optimization vendor Packeteer has buckled to pressure from aggressive investor Elliot Associates and sold itself to Blue Coat Systems.

Blue Coat has a wide area network (WAN) application delivery offering called ProxySG.

Packeteer has been under prolonged and intense pressure from Elliot Associates to return more value to shareholders. Elliot launched a hostile takeover offer of $5.50/share which Packeteer rejected at the beginning of the month. At that time Packeteer's board said it was exploring options to maximise shareholder value.

Blue Coat is buying Packeteer for $268 million or $7.10/share and giving Elliot Associates $40 million in zero coupon convertible notes; so Elliot walks away with a lot of cash to devote to its next target.

Packeteer has about 50,000 units of its PacketShaper product installed. Blue Co will add its Quality of Service (QoS), bandwidth/traffic management and application classification features into ProxySG, completing the task, it estimates, sometime in 2009.

Blue Coat also gains Packetter's channel (around 1,400 VARS) and 10,000 or so customers. The fate of Packeteer's executive team, headed by CEO David Cote, is not known. Honourable pay-offs might be in store for some.

The WAN optimization market is dominated by Riverbed, followed by Cisco and Juniper and a string of other players. Consolidation of these has been expected and the Blue Coat Packeteer deal might inspire copy cat purchases.

^{[Paul Roberts, news editor.]}