After F5 Backs Off, Whither Allot?

The strategic disposition of deep-packet inspection specialist Allot Communications has been open to interpretation lately.

In July, rumors and reports suggested that F5 Networks had been in months-long negotiations to acquire Allot. Those talks broke down, with F5 reportedly backing away from the table to reconsider its options. On that score, it’s worth noting that F5 struck a partnership early this year with Allot competitor Procera Networks.

No Deal with F5

Allot is a publicly listed company, traded on NASDAQ under the ALLT symbol. The company currently sports a market capitalization of about $275 million. In its aforementioned acquisition negotiations with F5, Allot apparently was asking for something in the salubrious neighborhood of half a billion dollars, a significant premium on its current valuation.

Since talks with F5 apparently collapsed, Allot chose to change course and announced plans to raise about $72 million through a secondary stock offering. The proceeds from that offering were to be used for “general corporate purposes, including acquisitions, investments in companies or products, or to buy use rights to complementary technologies.”

Course Correction

In what the company seems to perceive as a buy-or-be-bought world, it had reversed its role to the former from the latter. Then, early this month, Allot scrapped those its plans for a secondary offering, citing adverse market conditions.

All of which leaves Allot . . . where, exactly? The company obviously reserves the right to resuscitate its plans for a secondary offering, but it’s also possible that Allot will go in a different direction. Perhaps, in fact, Allot remains receptive to acquisition, by F5 Networks or by somebody else.

Allot has trod a tortuous strategic path this summer. It will be interesting to see where it goes from here.

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