Blue Coat agrees to be taken private in $1.3B deal

AP News
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Posted: Dec 09, 2011 9:19 AM
Blue Coat agrees to be taken private in $1.3B deal

Blue Coat Systems Inc., a provider of Internet networking and security products, has agreed to be acquired by private equity firm Thoma Bravo in a $1.3 billion deal.

Blue Coat said Friday that its shareholders will receive $25.81 for each share of the company's stock they own. That's a 48 percent premium over Blue Coat's closing stock price Thursday.

Blue Coat has been working to turn its business around in a challenging time for the networking equipment industry. Earlier this year, No. 1 networking gear maker Cisco Systems Inc. announced plans to lay off 9 percent of its workforce to cut costs and try to revive stalling profits. Blue Coat reorganized its product groups in May in an attempt to boost innovation and focus.

Investors have been skeptical. Thursday's closing stock price was down 41.5 percent year-to-date.

The company sells WAN, or "wide area network" optimization technology, which helps boost the performance of applications shared over computer networks. Analysts see promise for the company in that area, while demand for its computer security products has been lackluster. In November the company reported a 62 percent drop in its fiscal second-quarter net income, hurt by lower demand for its security products. Its outlook, however, was well ahead of Wall Street's expectations.

Blue Coat shares rose $7.78, or 44.5 percent, to $25.26 in premarket trading Friday.