Enterasys Networks this week agreed to a US$386 million buyout offer by two private investment firms.
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 at a price of US$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."
Tennenbaum Capital Partners, based in California, is a private investment firm with more than US$3.7 billion under management. The Gores Group, based in Los Angeles, manages 13 software and other technology companies. In 2002 it bought Enterasys' network management arm, Aprisma Management Technologies, and then sold it in January to Concord Communications - now a Computer Associates company. The investment firm has acquired and sold off other networking vendors such as Cable & Wireless' U.S. operations, and various other technology companies over the last several years.
Enterasys had struggled the last few quarters, with its net losses growing from US$5.8 million in September 2004 to US$23.6 million in June 2005. But it posted a major upswing in September, with US$72.9 million in net income on US$81.8 million in sales. Since August, the company's share price has risen from as low as US$1 to US$10.32 at the close of the market last Friday.