Packeteer made a play for supremacy in the emerging WAN optimization and wide area file services (WAFS) market on Tuesday by acquiring Tacit Networks for $78 million in cash.
Packeteer, which already leads the WAN optimization market, adds WAFS to its remote management product arsenal with the acquisition of Tacit along with Tacit's OEM relationship with Fibre Channel switch maker Brocade. Packeteer and Tacit have had a reseller agreement since last September.
The WAFS and WAN optimization market has been a hot one, also attracting the likes of Cisco, Juniper and HP, as IT departments look for an easier way to get a handle on far-flung applications and operations.
The deal also gives Packeteer a strong Windows offering. Tacit is the only supplier that delivers CIFS, WAFS and acceleration technologies, plus a complete branch office server replacement solution that includes DNS, DHCP, file and print services, in partnership with Microsoft, enabling the extension of the data center to branch offices in a single appliance.
"This acquisition puts Packeteer on the short list for every CIO grappling with server consolidation initiatives and application performance issues that impact the user experience at the branch office," said Packeteer CEO Dave Cote.
Cote said on a conference call that he doesn't expect the deal to land the company in competition with Microsoft. "We are complementary to Microsoft, and I think Microsoft sees it the same way," Cote said. "Tacit's offering, more than any other WAFS provider, is in fact complementary to Microsoft."
With more than 60% of all corporate data residing outside the data center, and half of that residing in remote locations, the need to consolidate branch office e-mail, file and application servers without sacrificing application performance is growing.
The combined company will be able to "solve virtually every networked application performance problem at the branch office," said Tacit CEO Greg Grodhaus.
The deal includes the assumption of vested and unvested Tacit stock options which will be exercisable for an aggregate of approximately 300,000 shares of Packeteer common stock.
Tacit's standalone financial statements for the abbreviated second quarter are expected to contribute about $1 million in revenues and $1 million in operating losses. "While we expect higher revenues and improved operating margins on a quarterly basis for the second half of this year, we expect this transaction to be dilutive to Packeteer's pro forma earnings through the fourth quarter," Packeteer said in a statement.
The deal is expected to close in the second quarter. Tacit will continue to operate in South Plainfield, N.J.