Riverbed will extend its network performance management business into the application performance management market and will move it into the converged market for NPM and APM with over $250 million in annualized revenue. The deal is said to turn Riverbed into a company with more than on billion dollars. That figure matters because the Thomson Reuters consensus estimates are $834.75 million and $962.2 million.
As far as what gets added here, the consensus estimates for OPNET are $198.35 million in this year’s fiscal sales and $228.55 million in next year’s fiscal sales. The OPNET transaction is expected to be accretive to Riverbed’s 2013 non-GAAP earnings, with more meaningful revenue and operating synergies in 2014.
Riverbed is financing this deal with existing cash on hand and new debt. OPNET’s market cap as of the close of Friday was $741.4 million, but the $32.10 share price compares to a 52-week range of $22.08 to $47.97.
Our question is not whether the companies should be doing this, but more along the lines of whether it is enough of a premium to where OPNET has traded in the past to get approved. Based on insider ownership and on the concentration of a few more large institutional holders, it seems likely that enough votes exist for this to close. That might not stop class-action suits, but that is another matter.
JON C. OGG
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