Security

Blue Coat to Acquire Packeteer for $268 Million

Security and wide-area network acceleration company Blue Coat Systems has made a deal to buy Packeteer, a longtime WAN optimization vendor, for about US$268 million.

Blue Coat will integrate Packeteer features, including the company's traffic prioritization technology, into its own Blue Coat ProxySG line of appliances, according to a company press release. The deal will also help Blue Coat reach more customers through Packeteer's well-established global sales and distribution channel. The company expects significant cost savings almost immediately.

Packeteer, founded in 1996, was an early developer of appliances that could identify different types of packets in the traffic going over a WAN and let administrators shape traffic to make critical applications perform better. This and other WAN optimization techniques are widely used to speed up data transfers and application performance over long distances, helping enterprises centralize IT resources and maintain global operations. Worldwide, Packeteer has more than 10,000 customers and an installed base of more than 50,000 products, according to Blue Coat.

Blue Coat, also founded in 1996, makes a variety of appliances for securing and speeding up applications over WANs, and has said it has more than 8,000 customers.

Both companies are publicly held and based in Silicon Valley, with Blue Coat in Sunnyvale, California, and Packeteer in nearby Cupertino. Blue Coat will buy Packeteer with a combination of cash and an $80 million private placement of convertible notes. The deal will consist of a tender offer for all of Packeteer's shares, followed by a merger of Packeteer with a subsidiary of Blue Coat. The deal is expected to close this quarter.

Blue Coat's bid of $7.10 per share represents about a 15 percent premium over Packeteer's Friday closing price of $6.18. After the deal was announced Monday, Packeteer's shares on the Nasdaq were up $0.78 at $6.96.

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