Packeteer Hints Tech M&A Still Active

The M&A market may have slowed down a bit even in the tech sector, but there are still signs of life. Take Packeteer, the Cupertino, Calif.,-based bandwidth-management software company. It had drawn the attention of two hedge-funds controlled by Elliott Associates as well as a higher-priced offer from Blue Coat Systems, a network security company.

The winner was Blue Coat, which bid $7.10 a share for Packeteer, or $268 million, versus the $5.50 a share offer from hostile bidders at Elliott, which was only willing to pay $201 million. Which just goes to show, if hostile takeover artists are going to put their money where their mouth is, they should use enough money.

Packeteer's products include PacketShaper, which provides monitoring services for application traffic; iShared, which helps companies share traffic of documents such as files and email; and Mobiliti software, aimed at mobile users and small companies.

Even worse for Elliott Associates, Blue Coat robbed them of the opportunity of spinning their failure to close the deal. Blue Coat was the first one out with a press release. Blue Coat made its announcement first thing in the morning Monday. Elliott gave its concession speech nine hours later, noting simply that its offer would have expired on Wednesday anyway.

Before at Packeteer managers congratulate themselves, they should read a research note from Kaufman Bros. analyst Manuel Recarey:

To achieve its financial targets, Blue Coat plans to eliminate management overhead, R&D redundancy, and G&A costs (especially at the director level), as well as gain manufacturing scale.