Here's the Buyout We've Been Waiting For

Time flies when you're having fun. A month ago, I told you that network security expert SonicWALL (Nasdaq: SNWL  ) might be a buyout candidate. Cisco Systems (Nasdaq: CSCO  ) and Juniper Networks (Nasdaq: JNPR  ) could find it faster, cheaper, and easier to just buy the company instead of reinventing the wheel.

Well, SonicWALL has indeed found a buyer -- but it's none of the usual suspects. Instead, the company is going private in a $11.50 cash deal per share. That's a 28% premium over last night's closing price, and my CAPS portfolio sure appreciates the quick boost.

The buyers, a consortium led by Thoma Bravo, aim to keep SonicWALL's organic growth going while also kicking off a "consolidation strategy in the network security market as well as adjacent markets." Many of SonicWALL's competitors are bigger and richer, which would seem to limit the consolidation options.

Little Allot Communications (Nasdaq: ALLT  ) could be one candidate, because Allot's network optimization and security products resemble what SonicWALL already offers. As for a company that provides some spice in adjacent markets, networking expert Radware (Nasdaq: RDWR  ) could complement SonicWALL's product portfolio.

But Thoma Bravo likes to buy several companies in interesting sectors and combine them in new, value-unlocking ways. On that note, the firm recently acquired backup and disaster-recovery specialist Double-Take Software (Nasdaq: DBTK  ) in a $242 million deal. There could be synergies brewing there, and the possible targets I mentioned earlier could very well be on Thoma Bravo's wish list, too.

Is this the endgame for SonicWALL, or will someone like Cisco step in with a better offer? The comments box below is open for discussion.

All-star CAPS player and Fool contributor Anders Bylund holds no position in any of the companies discussed here. He does have some training on managing both Cisco and Radware systems, if that helps any. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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