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Blue Coat: Private Equity Acquisition Won't Change Channel Strategy

Blue Coat Systems is assuring top solution providers it won't lose any channel momentum as it's taken private by Thoma Bravo.

Blue Coat Systems is seeking to assure solution providers that its acquisition by private equity powerhouse Thoma Bravo won't dull its channel chops.

"Our focus won't change at all," said Steve Daheb, Blue Coat's chief marketing officer and senior vice president of corporate and business development, in an interview with CRN. "Obviously there are things you need to put energy into when you're a public company, and that energy can now go right into serving our partners. We're really excited about that."

Blue Coat on Friday confirmed it would be taken private for $1.3 billion by an investor group headed by Thoma Bravo. Under the terms of the agreement, Blue Coat shareholders receive $25.81 in cash for each share of common Blue Coat stock, representing a 48 percent premium based on the company's Dec. 8 closing price.

"I think it says a lot about the direction that it's almost a 50 percent premium," Daheb said. "That speaks for itself."

Blue Coat, said Daheb, spent six months reviewing all of its strategic options, including choices that would leave it a public company. Thoma Bravo, which also owns channel-facing security vendors SonicWall and Tripwire, presented the best option.

"After an extensive evaluation, our [board] determined that an agreement with Thoma Bravo brought the greatest value to shareholders and provided the best platform, long-term, for Blue Coat to thrive as a company," Daheb said. "One of the things that attracted them to Blue Coat was the strength of our channel. We also count 90 percent of the Fortune 500 as our customers."

Daheb added that Blue Coat doesn't anticipate any managerial or other corporate changes following the acquisition, which is expected to close in the first quarter of 2012.

It's been a year of transitions for Blue Coat, which parted ways with then-president and CEO Mike Borman in August and named Gregory Clark its new chief executive. At the time, Blue Coat had reported a sizable decline in sales and profit for its fiscal first quarter.

Blue Coat's also made significant changes in its channel ranks, choosing to de-centralize its worldwide channel management in favor of regionally-based executives. Jim Harold, former vice president, worldwide channel sales, left the company as a result.

Laurie Usewicz, vice president of Americas channel sales, told CRN Friday that there wouldn't be any change to Blue Coat's channel strategy following the acquisition.

"If anything, our channel growth will be further enhanced," Usewicz told CRN.

Next: Blue Coat VARs See No Cause For Concern


According to Blue Coat solution providers interviewed by CRN, Usewicz and Daheb addressed Blue Coat's partner council on Friday to assure them of the same and that there was little reason to be concerned.

"My confidence level is strong and has been for a while," said Luis Palacio, senior director of vendor relations for FishNet Security, a Kansas City, Mo.-based solution provider. "I have seen more than enough from the CEO on down to know they're committed to working with the channel, so that's not a concern from our perspective."

Palacio said Blue Coat told VARs at its October partner conference in Miami that it would do a better job marketing itself as an infrastructure vendor -- one that can tie security, WAN optimization and cloud services together as a solution set rather than with a piecemeal focus.

Going private, Palacio said, allows Blue Coat to stay focused on that mission with fewer distractions.

"I think Blue Coat has done an effective job in their messaging -- less, 'we're a security company and we're going to dabble here' and more 'we see the market over the next few years and there's an opportunity for an infrastructure solution," Palacio said. "There's a good possibility that their competitors have underestimated them. Now that they have protection from the Street, it'll end up being a good solid story."

Dan Wilson, co-founder and vice president of partner alliances at Accuvant, a Denver-based solution provider, said he'd be surprised if Blue Coat changed course as a result of the acquisition.

"Their channel strategy has always been one we've been fond of, and they've done a good job balancing that with the technology," Wilson said. "Even prior to the news [of being taken private], their product strategy was crystallizing and the new management team they have seems to be tightening down."

Wilson said he was happy a decision had been made, following several months of acquisition and even hostile takeover bid rumors as Blue Coat's financial turmoil became public. VARs are curious as to whether Thoma Bravo will attempt to integrate its various IT security properties more tightly, Wilson said, but the feedback partners had received from Blue Coat was that that wasn't the plan.

Accuvant's Blue Coat sales are growing, and while the VAR is still mostly focused on Blue Coat's security products, it is gaining momentum with the WAN optimization offerings and also kicking the tires on Blue Coat's cloud-based security services, Wilson said.

"We're making some investments there," Wilson said. "It's not something we've fleshed out completely just yet but we talk a lot about it."

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