"Home prices driving tech workers overseas"
Expand Networks went into receivership in October.
Sources inform ''Globes'' that Riverbed Networks Inc. (Nasdaq: RVBD) is about to acquire Expand Networks Ltd. for $10 million, three months after the company was put in receivership. The sale is due to be closed next week, after Expand special administrator Adv. Paz Rimer submits the deal to the Haifa District Court for approval.
The sale of Expand Network's activity is particularly sad. It was in business for 13 years, developing enterprise network optimization technology, with a focus on remote access to applications run on an enterprise's servers. The company raised $100 million, most of which will be written off with the sale. Investors include Challenge Fund - Etgar, Vertex Venture Capital, DFJ Tamir Fishman Ventures Ltd. (TASE: TFVC), TechnoPlus Ventures Ltd. (TASE:TNPV), Eurocom Group, Discount Investment Corporation (TASE: DISI), Intel Capital, and Time Warner Inc. (NYSE: TWX).
In October, Plenus Venture Lending Fund petitioned the court to appoint a receiver for Expand Networks on the grounds that it could not repay a $10 million loan, granted in 2007. After agreeing several times to postpone repayment, Plenus finally decided to petition for a receiver for the company. Plenus and DFJ Tamir Fishman said that there were two offers to acquire Expand Networks for $6 million.
Although Expand Networks won appreciation for its technology, its operational performance was much less impressive. The court documents show that it was losing $250,000 a month and had $11 million revenue in 2010. Although it was a pioneer in its field, it failed to make a breakthrough. Its buyer, Riverbed, was a smaller rival when it started out in 2000. Riverbed has a market cap of $3.7 billion and is projected to post $720 million in sales in 2011.
This is the second time that Riverbed has considered acquiring Expand Networks. In late 2009, there were talks to acquire it for $30 million, but nothing came of them. If the court approves the sale, this will be Riverbed's first acquisition in Israel.
Besides the sale itself, a major question mark hangs over the future of Expand Networks' employees afterwards. When it went into receivership, scores of employees were fired in an effort to balance operations. Considering the company's history and the strong synergy between the two companies, Riverbed may decide to keep a small part of Expand's business and development activities with a minimum of Israeli employees.
Published by Globes [online], Israel business news - www.globes-online.com - on December 28, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011
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