Enterasys Networks will become a private company, as it agreed to a $386 million buyout offer by two private investment firms last week.
Enterasys, which makes LAN switches and routers, firewall, intrusion-detection and other network security gear, will be acquired by The Gores Group and Tennenbaum Capital Partners for $13.92 per share.
"This transaction provides our shareholders with a substantial premium over the current market and enterprise values of the company," said Mark Aslett, president and CEO of Enterasys, in a statement. "We believe operating as a private company with the backing of Gores and Tennenbaum will enable us to capture market opportunities not available to Enterasys today."
Aslett and the Enterasys management team will remain in charge of the network company. The deal is expected to close by year-end.
Tennenbaum Capital Partners has more than $3.7 billion under management. The Gores Group manages 13 software and other technology companies. In 2002 it bought Enterasys' network management arm, Aprisma Management Technologies, and sold it in January to Concord Communications - now a Computer Associates company. Gores acquired and sold off other network vendors and other technology companies over the last several years.
Enterasys' products compete with offerings from vendors such as 3Com, Cisco, Extreme Networks, Foundry Networks, HP ProCurve, Nortel and Force10.
Enterasys struggled the last few quarters, with its net losses growing from $5.8 million in September 2004 to $23.6 million in June 2005. It posted a major upswing in September, with $72.9 million in net income on $81.8 million in sales. Since August, the company's share price has risen from as low as $1 to $13.25 at the close of the market last Wednesday. n