Blue Coat offers US$268M for Packeteer

The deal will give Blue Coat the ability to incorporate key Packeteer technologies into the Blue Coat ProxySG family of appliances to provide increased application understanding and traffic prioritisation capabilities, said Brian NeSmith, president and chief executive officer, Blue Coat Systems.

Additional revenue from the sale includes support and development of the PacketShaper product; increased penetration of the WAN optimisation market with the addition of Packeteer's global sales distribution channel to Blue Coat's existing channel; and the expansion of Blue Coat sales opportunities through cross-selling to newly added Packeteer customers.

NeSmith said the acquisition of Packeteer will enable the vendor to extend its leadership in solving branch office application performance challenges and addressing security threats by adding an extensive sales channel, integrating its sales organisations, and reinvigorating the PacketShaper product and adding it to its solution set.

“At the same time, we will begin to aggressively integrate Packeteer technologies with our own to continue building the next critical layer above the router,” he said. “Packeteer is a pioneer in network traffic prioritisation and shaping, and holds an extensive patent portfolio in these areas. Its technologies enable the identification of specific applications over the WAN and will enrich existing Blue Coat application intelligence technology.”

Packeteer has over 10,000 customers worldwide and an installed base of over 50,000 units. By acquiring Packeteer, Blue Coat will add 50 additional sales teams and over 1,400 channel partners to extend its reach into the WAN optimisation market.

According to NeSmith, the acquisition will be effected through a tender offer for all of the outstanding shares of Packeteer followed by a merger between Packeteer and a subsidiary of Blue Coat. The transaction is subject to customary conditions and is expected to close in the second quarter of calendar 2008.

Blue Coat will fund the acquisition through a combination of available cash and an US$80 million convertible notes financing. Merrill Lynch & Co. acted as exclusive financial advisor to Blue Coat in connection with the transaction, said NeSmith.