Blue Coat to buy Packeteer

Blue Coat Systems is buying rival WAN-acceleration vendor Packeteer for $268 million to boost Blue Coat's product features.

The deal will bring better visibility into applications and improve the traffic-shaping capabilities in Blue Coat's ProxySG appliances. These are the areas of expertise around which Packeteer built its PacketShaper appliances, with the company only later branching out into WAN acceleration. By contrast, Blue Coat's initial technology focused on accelerating applications over WAN links. (Compare application-acceleration and WAN traffic optimization products.)

In addition to the technology gains, Blue Coat will have access to Packeteer's extensive customer base, where a blending of the companies' product lines probably will mean a boost in revenues for Blue Coat. Packeteer has more than 10,000 customers representing more than 50,000 devices installed. By acquiring Packeteer, Blue Coat gains 50 sales teams and more than 1,400 channel partners, the vendor says.

Recent analyst reports place Blue Coat as No. 3 in sales of WAN optimization gear behind Riverbed and Cisco. The same analysts say the popularity of WAN acceleration is growing wildly, with Infonetics reporting 65% revenue growth worldwide from the third quarter of 2006 to the third quarter of 2007.

The sale is expected to go through by mid-year. Blue Coat will buy all outstanding shares of Packeteer stock to carry out the purchase.