Riverbed Technology said on Monday that it plans to buy Opnet Technologies for $993.3 million in cash and stock, bolstering its business in speeding up software on corporate networks.
Under the terms of the deal, Riverbed will pay $36.55 in cash and 0.2774 of a share for each Opnet share in a two-step merger. That represents a roughly 34 percent premium to the target company's Friday closing price.
By buying Opnet, Riverbed is hoping to add to its software management services, a complementary business to its own network hardware offerings. Opnet specializes in what's known as application performance management, which is meant to optimize the way that business software operates on networks.
“The addition of Opnet establishes Riverbed as the clear leader in the high-growth and converging application and network performance management markets,†Jerry Kennelly, Riverbed's chairman and chief executive, said in a statement. “This acquisition also transfor ms Riverbed into a billion dollar revenue company.â€
Riverbed will combine Opnet with its Cascade business unit. It said that the deal will add to its earnings per share on a pro forma basis beginning next year.
The deal comes as Opnet has been hurt by rising expenses. Separately on Monday, the company reported a nearly 19 percent drop in its profit for the second quarter of its 2013 fiscal year. Its 22 cents of adjusted earnings per share fell short of the average analyst estimate of 25 cents, according to Standard & Poor's Capital IQ.
The cash portion of the deal will be financed by Riverbed's cash on hand and financing that will be provided by Goldman Sachs and Morgan Stanley. The deal is expected to close by year end.
Riverbed was advised by Goldman and the law firms Weil, Gotshal & Manges and Wilson Sonsini Goodrich & Rosati. Opnet was advised by Lazard and Cooley.
