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Packet inspection/traffic management

Allot Raises Cash for M&A

Deep packet inspection (DPI) platform specialist Allot Ltd. (Nasdaq: ALLT) is issuing 4.5 million new shares to raise cash for potential acquisitions that would help it add new capabilities to its Service Gateway product. (See Allot Announces Share Offering.)

At the company's current share price of US$15.03 -- down 6 percent today following news of the new issue -- the sale of the new shares would raise $67.6 million. If the issue is over-subscribed, Allot has the option to issue a further 819,750 shares, which would (at the current price) add another $12.3 million to its coffers.

Allot, which has seen its stock climb from just $4.91 a year ago, expects to set a price for the new shares this week once Allot's CEO and CFO have concluded a short investor roadshow.

The company, which was the subject of recent speculation that it could be an acquisition target itself, says it doesn't have any specific acquisition targets in mind or any purchases planned. (See Allot in Takeover Talks With F5.)

But as it's looking to add relevant and complementary capabilities to its existing platform, and mobile data growth is fueling growth in the DPI and policy management sectors, it makes sense that Allot would be looking at companies with Policy and Charging Rules Function (PCRF) and real-time charging capabilities, such as its partner Openet Telecom Ltd. (See Allot, Openet Team for Policy Management and Data Surge Fuels Policy Control Boom.)

There are, of course, other policy control companies Allot could look at -- see Who Is Packing a PCRF? -- though it has lost the opportunity to make a play for two of the market leaders, Camiant and Bridgewater. (See Amdocs to Buy Bridgewater for $215M and Tekelec Splashes $165M on SPIT Specialists.) In addition to the new capital, existing investors are selling 965,000 shares, but Allot will not get any of the proceeds from that sale, which would raise $14.5 million at today's price.

The move comes immediately after Allot reported second-quarter revenues of $18.5 million, up 35 percent from a year ago, and a net profit of $1.6 million, a marked improvement from the net loss of $7.4 million reported for the second quarter of 2010. (See Allot Reports Q2.)

— Ray Le Maistre, International Managing Editor, Light Reading

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