Riverbed Technology Monday said it will acquire application performance management (APM) specialist OPNET Technologies, marking one of the biggest M&A moves in Riverbed's history.

The acquisition aligns Riverbed well for to capitalize on the converging APM and network performance management (NPM) segments.

Riverbed agreed to acquire OPNET for about $43 per share in cash and stock, representing a deal whose equity value is about $1 billion and enterprise value is about $921 million, the company said. Riverbed expects the combination of OPNET with its NPM-focused Cascade business unit to be a more than $250 million business.

Jerry Kennelly, Riverbed's chairman and CEO, noted that the acquisition pushes Riverbed into $1 billion revenue territory.

"The addition of OPNET establishes Riverbed as the clear leader in the high-growth and converging application and network performance management markets," Kennelly said in a statement.

[Related: Fast Times At Riverbed: 10 Years In, Can It Maintain Momentum?]

OPNET, founded in 1986 and based in Bethesda, Md., has some 700 employees and reported about $173 million in revenue for its fiscal 2012. The company offers a range of software-based products covering APM, NPM, network operations and modeling and simulation. It's among the top vendors in the APM market, where it competes with Compuware, AppDynamics, New Relic, IBM, BMC Software and a host of other companies, including Riverbed, which offers some similar functions in its Cascade line.

"Riverbed's leadership in accelerating business technology combined with OPNET's industry-leading suite of APM products provides customers with a single solution for monitoring, troubleshooting and actually fixing the application and network performance problems challenging them today," Marc Cohen, OPNET's chairman and CEO, said in a statement.

OPNET, which went public in 2000, has been challenged lately thanks to rising expenses. In an earnings report released Monday, OPNET said its second fiscal quarter profit -- about $3.9 million -- fell 19 percent year-over-year.

The deal is expected to close before the end of the calendar year. A Riverbed spokesperson told CRN that OPNET will become part of Riverbed's Cascade unit and that its employees and managers will remain in their current roles.

NEXT: Riverbed Gets Kudos For The Deal

Riverbed came up as a WAN optimization vendor, and dominates that segment outright during its 10th year in business. The company has sought to expand beyond WAN optimization and into the broader realm of what it describes as "performance" companies, in that it now offers application delivery networking, virtual server infrastructure, Web content acceleration and a host of other functions. The company reported about $726 million in revenue during its last fiscal year.

OPNET is hardly the first time Riverbed's acquired to expand its presence in a market. In 2011, Riverbed bought smaller companies like Zeus, Aptimize and assets from Expand Networks to increase its ADC, Web content optimization and WAN optimization holdings, and the Cascade products themselves were from a 2009 acquisition of Mazu Networks.

But at nearly $1 billion in value, OPNET is Riverbed's biggest M&A move yet, and initial analyst reaction to the deal on Monday was positive.

"In our opinion, this was the right acquisition at the right time for Riverbed as the company adds a nice tangential growth opportunity into the fold. We believe the synergies between the two organizations are pretty clear both from a product and distribution perspective, which should translate into a "1+1=3" scenario as Riverbed fully digests this acquisition during the course of 2013," wrote FBR Capital Markets researchers Daniel Ives and James Moore in a Monday note.

Ives and Moore said Riverbed needed an "offensive-style" acquisition to diversify its revenue opportunities beyond WAN optimization.

"With the WAN optimization market showing signs of renewed growth over the past few quarters despite choppy macro headwinds, we believe the addition of OPNET will further expand Riverbed's TAM over the coming years and give the combined company numerous cross-sell opportunities in the next generation networking build-out," they wrote.

PUBLISHED OCT. 29, 2012