Blue Coat in $268M deal for Packeteer

By Scott Moritz, writer

Packeteer’s white knight arrived in a Blue Coat. Network security shop Blue Coat (BSCI) says it will pay $268 million in cash for Packeteer (PKTR).

The deal calls for Blue Coat to pay $7.10 a share for the Internet traffic management outfit — a 15% premium over the closing price Friday.

As part of the deal, Blue Coat will buy the 10% Packeteer stake held by private-equity firm Elliot Associates. Packeteer had rejected a $200.8 million takeover offer from Elliott earlier this year. In the new deal, Blue Coat will issue $80 million in convertible notes to Francisco Partners, a unit of Elliot Associates.

Packeteer, known as a wide-area-network optimization shop, uses software and hardware to speed up transmission of data communications. Packeteer and rival Riverbed (RVBD) have seen a steady decline in sales growth in the last year as tech spending slows.

Riverbed is down 58% in the past year. And prior to the deal, shares of Packeteer were down 36% since last year. Packeteer rose 12%, to $6.96, in premarket trading Monday.

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You mention PKTR and RVBD as having steady decline in sales growth in the same tone. Can you also post some qtr over qtr numbers to showcase the “slowing” growth at all the companines?

It seems like BCSI is buying PKTR by significantly diluting their shareholders for much slower growth. That shows their confidence in their own business model.

Posted By San Jose, CA : April 21, 2008 12:18 pm

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