M&A Alert - August 13, 2009
Fluke Networks Agrees to Acquire AirMagnet
Transaction Overview
On August 13, 2009, Fluke Networks, a subsidiary of Danaher Corp (NYSE: DHR, market cap: $20B) announced that it has agreed to purchase AirMagnet. The transaction value was not disclosed.
Target Description
Based in Sunnyvale, California, AirMagnet was founded in 2001. AirMagnet provides security, performance management, and compliance solutions for wireless local area networks (WLAN). Product includes AirMagnet Enterprise, WiFi Analyzer, Spectrum Analyzer and AirMedic, which provide wireless performance management and troubleshooting tools. It also offers AirMagnet Survey and Planner that help model and build wireless infrastructure. AirMagnet had raised $4.7mm in funding from VenGlobal Capital Fund and Acer Technology Ventures (Ronald Chwang, who joined the Company’s board) and an additional series D round of financing from Intel Capital. Intel’s series D funding amount was not disclosed. AirMagnet has 8,200 customers worldwide, including 75 of the Fortune 100 companies and 80 employees.
Buyer Description
Based in Everett, Washington, Fluke Networks, Inc., a subsidiary of Danaher Corp, provides installation and certification, testing, monitoring and analysis of both wired LAN and wireless LAN networks used by enterprises and telecommunications carriers.
Transaction Parameters
Transaction value was not disclosed. As discussed below, the WLAN sector is well along in consolidation with values generally declining as the remaining independent vendors are acquired. Recent transactions include Belden’s purchase of Trapeze ($133mm, 2.4x Revenue), Aruba’s purchase of AirWave ($37mm, 4.6x Revenue) and HP’s purchase of Colubris Networks (value undisclosed).
Strategic Rationale
As Fluke Networks’ historical area of strength, wired network testing and management, has begun to be adversely impacted by wireless network, Fluke Networks has aggressively begun to build capabilities within the wireless network realm. AirMagnet brings a host of capabilities that are consistent with this strategy.
Architect Partners’ Observations
AirMagnet has experienced a lifecycle common to many technology companies; competing with a good but limited product set against much larger vendors who have incorporated similar capability into a much broader product set. In this case, all major WLAN equipment vendors (Cisco, Aruba, Meru, HP) have “good enough” security and management capabilities already incorporated into their product sets. Over the past several years, a number of AirMagnet competitors were acquired and AirMagnet found themselves in a challenging competitive position with limited exit options. Not a good dynamic to thrive as an independent entity or for a value maximizing M&A exit.