Barron's Highlights Takeover Targets in Tech (RVBD, BMC, JNPR, FFIV, BRCD more)

October 26, 2009 12:51 PM EDT

Barron's reported in an article today their thoughts on companies in the acquisition radar for many of the big tech companies. The sector is up about 60% through 2009, and investor confidence may be bolstered by the value that larger companies are putting on smaller rivals. A recent example of this is EMC (NYSE: EMC) buying-out storage specialist Data Domain for $33.50/Share, roughly an 85% premium.

Jeffries Vice Chairman Paul Deninger states that "if it weren't for the recession, I might even dare call the market 'hot'." He thinks that 2010 will be an even hotter market for Tech M&A than 2009 was, and 2009 saw a bid by Oracle (NASDAQ: ORCL) for Sun (NASDAQ: JAVA) and Cisco (NASDAQ: CSCO) with a move into the server business.

Companies like Riverbed Technology (NASDAQ: RVBD), BMC Software (NYSE: BMC), Juniper Networks (NASDAQ: JNPR), and F5 Networks NASDAQ: FFIV) are all attractive takeover prospects. Analysts typical set price points for companies like this at 10% - 40% above current levels. Other companies that see this upside are Hewlett-Packard (NYSE: HPW), Intel (NASDAQ: INTC), and Microsoft (NASDAQ: MSFT).

NETWORKING:
Due to Cisco's entry into the server market, other big names like IBM (NYSE: IBM), HP, and Dell (NASDAQ: DELL) will probably start looking around to acquire a company that is prominent in networking. TheInfoPro's Ken Male thinks that Riverbed is at the top of that list. Male believes that, although Riverbed could fit in with any of the giants, HP looks like the most likely buyer since they are looking to bolster their networking offerings to counter Cisco. Male also names Dell ("less likely until it digests its pending purchase of Perot Systems (NYSE: PER)"), Juniper ("to bulk up to remain independent"), and Cisco as a "Dark Horse."

For the same reasons listed above, Brocade (NASDAQ: BRCD) is mentioned. Brocade, however, has a larger market cap than Riverbed; Brocade has $4 billion in cap versus Riverbed's $1.5 billion.

STORAGE:
Barron's goes on that storage companies are in-play as the giants try to bulk-up that corporate segment. NetApp (NASDAQ: NTAP) has received some attention as a pure-play in that segment. Additionally, both NetApp and Dell are rumored to be interested in CommVault Systems (NASDAQ: CVLT). The company is relatively small, at a $860 market cap, and has an intriguing blend of back-up storage, de-duplication applications (storage technology that saves space by not duplicating existing files and data), and data protection.

A company that specializes in "thin provisioning" is 3Par (NYSE: PAR). Thin provisioning expands data capacity on corporate storage systems. NetApp may be interested to cull more enterprise customers.

SERVER SOFTWARE:
Red Hat (NYSE: RHT), BMC Software, and Citrix Systems (NASDAQ: CTXS) are three companies mentioned as desirable acquisitions for their server software options. Red Hat has marvelous open-source (modifiable by the general public) software, BMC has core business-service management, and Citrix offers desktop-virtualization software (for remote manipulation of desktop computers).

Finally, Seligman's Rich Parower is a fan of Symantec (NASDAQ: SYMC) because of their new CEO, Enrique Salem. Parower believes that Salem will "light a fire under the sales force."

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