Riverbed Technology today announced its intention to acquire Application Performance Management (APM) vendor OPNET. The deal is valued at $1 billion and is expected to close by the end of this calendar year.
Riverbed will be paying $43 per OPNET share in a cash and stock deal. The plan is to combine the OPNET technology with Riverbed’s Cascade business unit.
“This is a strategic acquisition that is highly complementary to Cascade and Riverbed as a whole,” Jerry Kennelly, Chairman and CEO at Riverbed said during a morning press conference to discuss the deal.
Cascade is Riverbed’s Network Performance Management (NPM) technology. Riverbed acquired the Cascade technology with the acquisition of CACE technology in October of 2010. Eric Wolford EVP and GM for the Products Group at Riverbed said during the call that the acquisition of OPNET is an acceleration of the strategy that the Cascade product group is all about.
“This isn’t a new direction, but an acceleration of our existing strategy focused on delivering performance improvements to the network,” Wolford said. “Cascade NPM brings visibility to the network. OPNET goes beyond that, measuring the true end user experience with capabilities including application component monitoring, code level traces as well as root cause analysis.”
Wolford added that from a competitive standpoint, there is little or no overlap between what OPNET provides and what Riverbed already delivers. He added that customer overlap also isn’t an issue either.
“By marrying NPM and APM into one solution, Riverbed will give customers the performance management tools they need to build a bridge from the network to the application, providing the highest availability for both,” Wolford commented.
The OPNET APM solution will also help Riverbed’s core WAN optimization business as well. Riverbed’s WAN optimization product suite include the Steelhead product family which was recently updatedwith improved virtualization capabilities.
Kennelly noted that the APM market isn’t quite the same as the WAN optimization market, but they are both in the same domain and very synergistic.
“APM goes hand in hand to make WAN optimization better,” Kennelly said.
As to why Riverbed decided to buy OPNET, instead of just building its own APM technology, Wolford said that it was all about accelerating the Riverbed product portfolio.
“This allows us to accelerate both in revenue size and product size to better skate to where the puck will be,” Wolford said.