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Blue Coat Systems taken private for $1.3 billion cash

Private equity gets paws on under-performing vendor

Security vendor Blue Coat Systems is once again a private company after the company's shareholders confirmed a December takeover that values the company at $1.3 billion (£830 million).

The acquisition by private equity company Thoma Bravo brings full circle over a decade of quoted existence after Blue Coat (then called CacheFlow) took itself public during the height of the dot.com boom in 1999.

Since then Blue Coat has more often than not been the acquiring party, buying the high-rated traffic management outfit Packeteer in 2008. Founded in the mid-1990s, in 2002 with the dot.com bust in full swing, the company changed its name to Blue Coat Systems.

Interestingly, at more than $25 per share in cash, Thoma Bravo has agreed to pay a hefty premium over the company's share price to get its hands on a middle-ranking security and infrastructure company.

The market Blue Coat sells into is still hugely in vogue but it has recently struggled for some time in the face of management departures, flat sales and falling profits. Frankly, with no other buyers willing to stump up a premium to get their hands on Blue Coat the only other option for shareholders was private equity.

At least one hedge fund is reported to have been a major shareholder in Blue Coat, which speaks of the enthusiasm for a clean exit at a turbulent time.

"The security and network acceleration markets have tremendous growth opportunities, and Blue Coat as a private company is now well poised to further strengthen its market leadership," said Thoma Bravo managing partner Orlando Bravo.

The acquisition is the firm's fifth in the technology sector, four of which have been in networking, he said.


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