Five Months Into Activist Campaign, Elliott Offers To Buy Gigamon

The insurgent investor had been pushing to have the network visibility and traffic monitoring technology company sell itself. Now it may be hoping that its bid will stimulate demand from strategic buyers. However, the activist fund may be hoping that Gigamon agrees to be acquired by the fund's private equity unit.
By Ronald Orol ,

Activist fund Elliott Management's buyout shop unit has submitted an offer to buy Gigamon Inc. (GIMO.N), according to a person familiar with the situation.

The move comes about five months after the insurgent fund launched a public campaign to have the network visibility and traffic monitoring technology company sell itself. In this case, a private equity unit Elliott Management launched last year, Evergreen, has attained financing and made a formal bid, he said. It is unclear at this stage what Elliott Management's bid price may be. The bid was first reported by Reuters. 

Elliott on occasion offers to buy companies in the hopes that it will drive its target to find a strategic buyer. In this case, however, the activist fund may be hoping that Gigamon agrees to be acquired by the activist fund's private equity division.

Singer in May reported owning a 15.3% stake in Gigamon and noted that it intended to communicate with the company's management about its intent to encourage the company's board to "undertake a strategic review process" that could include a sale of the business.

The company, which is based in Santa Clara, Calif., share price shot upwards on the news in May, to $39.25 a share. The company's shares have remained elevated ever since, jumping up 3% on Monday afternoon to trade at $43.80 a share on the news. Gigamon Inc. has a $1.6 billion market capitalization.

The activists could still be betting that a rival buyer comes in and picks up Gigamon. A number of its core competitors have been acquired. In January, network security and software company Ixia (XXIA) was acquired by Keysight Technologies in a $1.6 billion deal. Ixia had previously acquired Anue Systems Inc. for $155 million and BreakingPoint for $160 million, both in 2012. Both Anue and BreakingPoint create network security systems. And in 2013, Ixia acquired network monitoring company Net Optics Inc.for $190 million.

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Also, VSS Monitoring, a network intelligence company, was acquired by Danaher Corp.in 2012 and is now part of Netscout. (Netscout acquired Danaher's communications business in 2015, and as part of that deal it purchased the VSS monitoring business.)

The activist fund and its star technology portfolio manager, Jesse Cohn, has had some success driving technology companies into sales or other strategic M&A actions in recent years. Two recent targets have included Citrix and Qlik Technologies.

Qlik Technologies faced limited private equity interest but subsequently sold itself in a $3 billion cash deal to Thoma Bravo LLC, one of the buyout shops reportedly interested in Citrix.

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