January 21, 2009, 9:49 AM — Riverbed will acquire Mazu Networks to add application performance analysis to its offerings, allowing enterprises and carriers to measure the benefits of WAN optimization.
Riverbed's Steelhead WAN (wide-area network) optimization appliances are designed to make applications and data access work faster over long distances. Mazu sells appliances that can measure application usage and performance and report on it. Riverbed will offer those appliances as products on their own but could also integrate the Mazu technology into its own products, said Eric Wolford, executive vice president of Riverbed. That would give enterprises a tool to diagnose the need for Riverbed's gear and then quantify its benefits, plus give service providers the data they need to prove the value of a managed WAN optimization service.
Riverbed will pay US$25 million in cash when the deal closes, probably before the end of this quarter, and as much as $22 million more if Mazu meets targets for booking deals in the 12 months after the close. For that maximum payment, the Mazu team would have to achieve $35 million in bookings, according to Riverbed.
Mazu will become a business unit of Riverbed, which will remain primarily a WAN optimization company, the company said. Riverbed expects the effect of the deal to be neutral to the non-GAAP (Generally Accepted Accounting Principles) earnings it reports this year and to add to its results in 2010. Riverbed is based in San Francisco, but Mazu will remain in Cambridge, Massachusetts. The bulk of its approximately 65 employees will go to work for Riverbed, though some back-office operations will be consolidated, Wolford said.
The acquisition will also give Riverbed access to a larger customer base, Wolford added. Founded in 2001, Mazu has about 200 enterprise customers and logged about $16 million in bookings last year, he said.
