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Private investment firm buys Blue Coat for US$1.3B

Tim Greene | Dec. 12, 2011
The upside is that the company won't have to respond to quarterly pressures from Wall Street and will spend less on financial reporting required of public companies.

Blue Coat Systems has agreed to be bought by a private equity firm for about US$1.3 billion, which will buy out shareholders for a 48% premium over what the company's stock sold for yesterday.

Private equity and investment firm Thomas Bravo leads an investment group that made the offer.

A spokesman for the company says the change in ownership should have no effect on the company's security and WAN optimization products.

The upside is that the company won't have to respond to quarterly pressures from Wall Street and will spend less on financial reporting required of public companies, the spokesman says.

Blue Coat is operating under its third CEO since September when Michael Borman took over for Brian Nesmith. Borman left and was replaced by Gregory Clark in August of this year.

The company's numbers declined steadily under Borman, and its board started re-evaluating what to do with it about six months ago, Blue Coat Chairman David Hanna says in a press release.

Selling the company was not the plan when Borman was hired, the company said at the time. At his previous CEO job at Avocent, that company was sold. When Blue Coat hired him, he said he would not change the strategic direction of the company.

Blue Coat's stock price declined steadily from January when it peaked about US$32 through most of August when it bottomed out at just over US$12. Since then it has climbed gradually to about US$18, taking a sharp spike today on news of the buyout to more than US$25 at 11 a.m. Eastern Standard Time.

Similarly, its profits took a tumble from US$18.1 million in the quarter ending in October 2010 to US$8.4 million in the quarter ending in August of this year. For the latest reported quarter ending October of this year, profits were up to US$9.3 million.

 

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