Purchase of Procera
I want to rescind an earlier comment I made around Sandvine's potential play for Procera. I hadn't done appropriate due diligence and realized just how low it was valued net of cash.
I've been long Sandvine for some time but I am now long Procera as well. With Procera having $120 million in working capital, Sandvine could swallow the number two player without further dilution to shareholders and the purchase would be accretive after taking into account redundancies in admin/sales/RnD.
It's tough to determine a purchase price for Procera but software companies often sell for north of 2X sales ($150M + net working capital $270M) or $13.50 a share. If Cisco is the buyer then this is the sort of price I think we'll see. If Sandvine is then I think we'll see something closer to $10.50-$11 a share because they will need to keep some liquidity.