Riverbed Grabs Opnet for Application Performance Technology

Optimization advocate Riverbed Technology (NASDAQ: RVBD) has snapped up Opnet (NASDAQ: OPNT), an application and network performance specialist, paying $43 a share in cash and stock for the company in a transaction that equates to an equity value of $1 billion and an enterprise value of $921 million, according to the parties.

What do Riverbed and Opnet get out of the deal? Right off the top, Riverbed gains heft for its strategy to expand beyond optimization to the wider scope of so-called performance technology, a segment officials believe will blow up in size in the near future. With Opnet in the fold, Riverbed, which will merge Opnet into its Cascade network performance product business unit, is betting big on the converging market for application and network performance management.

The company figures that applying its brand name, channels and infrastructure to the Opnet acquisition will generate a significant uptick in revenue and earnings in 2014, with the Cascade unit itself showing some $250 million in annualized sales. Overall, the combined companies’ annual sales should approach $1 billion, about three-quarters of which is Riverbed’s.

Channel partners should expect a platter of new products focused on application and network performance, technology that “not only monitors network and application performance but also accelerates it,” the companies said.

“The addition of Opnet establishes Riverbed as the clear leader in the high-growth and converging application and network performance management markets,” said Jerry Kennelly, Riverbed chairman and chief executive.

Under terms of the deal, which is expected to close before the end of this year, Opnet shareholders will receive $36.55 in cash and .28 shares of Riverbed common stock for each owned share. Some of Riverbed’s financing for the transaction has come from Morgan Stanley and Goldman Sachs, officials said.

Opnet, which began operations in 1986, has been publicly held since 2000 and employs about 700 people, reported $170 million in sales for fiscal 2012. In its second fiscal quarter, earnings fell about 20 percent year-over-year. Its main competitors include Compuware (NASDAQ: CPWR), IBM (NYSE: IBM), BMC Software (NYSE: BMC) and New Relic.

In late September, Riverbed named Ian Whiting, formerly Brocade’s (NASDAQ: BRCD) worldwide sales executive vice president, to lead its sales efforts in the Americas, particularly to mold the vendor’s sales channels to meet customer demand.