Riverbed in talks to acquire Expand Networks

Advanced negotiations are for a deal at $30-40 million, after the WAN optimization start-up raised $85 million.

Sources inform ''Globes'' that Riverbed Technology Inc. (Nasdaq: RVBD) is in advanced negotiations to acquire Israeli start-up Expand Networks Ltd. for $30-40 million.

Expand declined to comment on the report, and no response was available from Riverbed.

Riverbed is a major competitor of Expand Networks; both develop WAN optimization products.

Expand Networks was founded in 1999, but its tale is best told from the end. Last week, Forrester Research Inc., said that Expand Networks was a leader in field, following an earlier report in June by Gartner Group, which said the same thing. However, the company's competitors include US giants such as Cisco Systems Inc. (Nasdaq: CSCO), Juniper Networks Inc. (Nasdaq: JNPR), Citrix Systems Inc. (Nasdaq: CTXS), Blue Coat Systems Inc. (Nasdaq: BCSI), and Riverbed. Gartner said that Expand was a small private company in a market led by large companies. In other words, it would not survive independently for long.

The sources added that Expand had been in contact with other potential buyers, and another communications equipment vendor may end up acquiring it, or else a company that wants to enter the sector.

According to IVC Online, Expand Networks has raised $85 million since it was founded. A sale for half this value means that its investors will chalk a major failure on the exit. Investors include Tamir Fishman Venture Capital (TASE: TFVC), Challenge Fund - Etgar, Vertex Venture Capital, TechnoPlus Ventures Ltd. (TASE:TNPV), Plenus Venture Lending Fund, Nochi Danker-controlled IDB Holding Corp. Ltd. (TASE:IDBH) unit Discount Investment Corporation (TASE: DISI), Shaul Elovitch's Eurocom Group, and Intel Capital.

Tamir Fishman owns 16% of Expand. In its financial report for the second quarter, Tamir Fishman wrote off 60% of its investment in the company, after it was valued at $50 million. Tamir Fishman said, "The company failed to meet its business targets for the second quarter" and was affected by the global economic crisis.

Published by Globes [online], Israel business news - www.globes-online.com - on November 16, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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