Radware Ltd. (Nasdaq: RDWR) has made no comment about being on the shelf for months, but it clearly is attracting interest among other communications equipment makers.
Riverbed Technology Inc.(Nasdaq: RVBD) has entered the race against Hewlett Packard Co. (NYSE: HPQ), which, as "Globes" was the first to report, is still in talks to acquire Radware. The bidding by the two companies is around $47 per share, reflecting a company value for Radware of $900 million to $1 billion, a 45% premium on its current market cap.
Radware's share rose 19.1% at the opening on Nasdaq to $39.03, giving a market cap of $745 million.
Radware is sticking with its "no comment" policy of recent months with regard to Riverbed's entry into the picture. At the conference call following the publication of Radware's third quarter financial report, executives declined to comment on the negotiations for the acquisition of the company, merely saying, "The company is keeping its eyes and ears open for opportunities to increase value for shareholders."
Radware knows Riverbed well. The two companies complement each other in terms of technological capabilities, they collaborate in the distribution of products, and sometimes submit joint bids in tenders for communications infrastructures.
Riverbed, founded in 2003, is considered an industry star. It has a market cap of $5.1 billion, and posted a net profit of $13 million on $147 million revenue for the third quarter.
The proposed merger is not just between two companies, but also between two fields of business. Radware makes products to improve the performance of applications by routing Internet traffic load (application delivery controller, or ADC), and Riverbed offers enterprise network optimization solutions between remote branches (WAN optimization controller, or WOC).
Network performance is one the obstacles to the era of cloud computing, or access to applications and computer resources on remote server farms, and a common solution could improve the picture.
Radware and Riverbed also complement each other in terms of market access. Riverbed is relatively weak in Europe and Asia, and Radware could complete Riverbed's geographical coverage.
Riverbed has $400 million in cash, and an acquisition of Radware could include a large share-swap component, which could explain the high premium that Radware's potential buyers are willing to pay.
Radware's share rose 19.1% at the opening on Nasdaq to $39.03, giving a market cap of $745 million.
Published by Globes [online], Israel business news - www.globes-online.com - on December 6, 2010
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