Shares of Riverbed retreated 18 percent to $18.47 at the close in New York, while Opnet advanced 31 percent to $42.05. Opnet investors will get about $43 a share, made up of $36.55 in cash and 0.2774 Riverbed shares, in a transaction with an equity value of $1 billion, the companies said in a statement on Oct. 29. That’s about a 34 percent premium to Opnet’s closing price on Oct. 26. Trading was shut down for two days this week because of Hurricane Sandy.
Riverbed, which creates technology to help customers run their software in far-flung data centers more efficiently, has benefited from the growth of cloud computing. The premium paid for Opnet suggests that Riverbed anticipates slowing growth for its traditional business, said George Notter, an analyst at Jefferies & Co.
“The deal seems rich,” Notter wrote in a research report today. He downgraded Riverbed’s shares to underperform from hold and cut his price estimate to $16.25 from $20. “The deal reinforces our concerns that the wide area network optimization market is maturing.”
The deal terms, with “a high mixture of cash,” suggest that Riverbed pursued Opnet aggressively, Notter said.
Riverbed, based in San Francisco, said it expects to close the deal by the end of 2012. After today’s drop, Riverbed has a market value of $2.84 billion, and the company had cash and short-term investments of $533.1 million as of Sept. 30.
Goldman Sachs Group Inc. (GS) advised Riverbed and will provide financing for the transaction, along with Morgan Stanley. (MS) Opnet, based in Bethesda, Maryland, received financial advice from Lazard Ltd. (LAZ)
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