Networking vendor Gigamon has agreed to sell itself to private equity concern Elliot Management, for around US$1.6bn.
The company on Thursday announced that shareholders will be given US$38.50 in cash for each share they own.
That's a little more than the $36.15 value of each share at the close of trading, but a 21 per cent premium on the price as of April 28th when Elliot Management let regulators know it had acquired more than five per cent of the company.
Analyst believe Elliot started to buy Gigamon shares in March, when they could be had for about $28 apiece. The company's buys were taken as a sign it felt Gigamon was undervalued, which sent the share price climbing nicely.
Rumours of an acquisition by Elliot's private equity limb, Evergreen Coast Capital, surfaced in September 2017.
Now the companies have decided that Gigamon's going to do best if it goes private.
Gigamon's canned statement is couched in perfect investor-speak, as it has CEO Paul Hooper saying “The Gigamon Board, with the assistance of independent financial and legal advisors, conducted a thorough review of options to enhance shareholder value and unanimously concluded that entering into this agreement with Elliott represents the best way to maximize value.”
Elliot is a taciturn organisation, with its management saying they look forward to building the business and not much more. But Isaac Kim, managing director of Evergreen, says he is keen on “exploring acquisitions to further bolster innovation.”
The transaction was announced on the same day as Gigamon's third quarter results, with the company reporting US$79.2m, a dip from Q3 2016's $83.5m. GAAP net income was $2.2m, down from $6.1m this time last year.
Gigamon's bread and butter is network traffic monitoring, which it then applies to security, network operations, or the chore of getting data flowing nicely into and out of clouds. The company is well-respected, but hardly a titan.
Elliot has a strong track record, so if it feels Gigamon can grow, organically, through acquisitions, or both, it's hard to bet against it. The ever-increasing importance of networks, and the volume of data traversing them, suggests it may not need genius-grade management to find some upside. ®
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