Deep packet inspection (DPI) vendor Sandvine Inc. announced on Tuesday it was purchasing a pair of companies and may be looking to buy more.

The Canadian maker of DPI-based policy solutions said it had completed an acquisition of CableMatrix Technologies Inc. and had entered into a definitive agreement to purchase Simplicita Software Inc. It also announced a stock offering of approximately $41.9 million (C$45 million), the proceeds of which it could use for possible future acquisitions. (See Sandvine Acquires Two.)

For both acquisitions, Sandvine will pay a combined $4.5 million in cash, as well as 0.9 million Sandvine common shares. It could also owe an additional 0.6 million shares if certain sales targets and business metrics are met by 2008. Altogether the total purchase price of the deals could reach $12.77 million.

Israeli vendor CableMatrix provides policy management solutions developed to ensure quality of service (QOS) across converged networks. Sandvine believes this is a complementary technology that could help it extend its own policy management services from the edge to the core network.

Simplicita "allows us to do really neat things working with DNS traffic," says Sandvine president and CEO Dave Caputo. That includes protecting DNS servers from untrusted traffic and enabling the creation of new ad-based services, all of which is done by creating network policies based on the "reputations" of network users. The Simplicita purchase is still subject to closing conditions but is expected to close by the end of June.

In addition to the acquisitions, the company announced today that it will raise $41.9 million through the sale of 8,911,000 common shares of Sandvine stock at the price of $5.05 per share. The shares will be offered to the public on a "bought-deal" basis, which means that underwriters Canaccord Capital Corp. and CIBC World Markets will purchase the shares directly before offering them to the wider market. (See Sandvine Announces Offering.)

Sandvine also granted underwriters options to purchase up to an additional 1,336,650 shares for thirty days following the closing, which is expected to happen on or about July 12, 2007.

Sandvine says the stock offering will be used for general corporate purposes and for possible future acquisitions. While CEO Caputo would not comment on whether the company had any particular acquisition targets in mind -- "That would be crazy," he tells us -- he did provide insight into what the company would be looking for in any potential buy.

"We are looking to acquire companies that have a great profile," Caputo says, which includes having great people that "fit in" with the Sandvine culture and a technological fit that is complementary to its hardware platform.

Since Sandvine offers its own hardware-based solutions, the company would be looking for acquisitions that would add software-based functionality to its products. Also important, Caputo says, is that they primarily target residential or consumer Internet service providers.

— Ryan Lawler, Reporter, Light Reading