|Procera trade on Friday - volume 4.2X average|
For the Fremont, Calif.-based network equipment maker, the move comes after investor Ronald Chez in October urged the board to evaluate strategic alternatives, including a sale. Chicago-based hedge fund Castle Union LLC joined Cehz about a week later and disclosed its 5% stake in Procera, arguing that the company is undervalued and should be sold. Castle Union subsequently increased its stake to 6.6% in December [here].
'They're not distressed, but they're losing share,' said an industry source about Procera.'They're the third player in a three-man race.' In the communications equipment space, Procera competes with Hod Hasharon, Israel-based Allot Communications Ltd. (ALLT) and Waterloo, Ont.-based Sandvine Corp. (SVC).
Toan Tran [pictured], a managing partner of Castle Union (one page Web site), told The Deal in October that he believed Procera could be sold for $12 per share or more and that it could garner interest from strategics such as Sandvine, Allot, F5 Networks Inc. (FFIV), Cisco Systems Inc. (CSCO) and Ericsson Inc. (ERIC). He also said that of the two players Procera directly competes with 'Sandvine and Allot' the former would be a better buyer because Allot and Procera would be a tough cultural fit.
Sources said Procera's recent board shift could bode well for a sale. The company appointed Tom Sapanos as new chairman in October [here], and the person he replaced, Scott McClendon, was known to be against selling Procera.
Procera's stock hit a high of $20 range in 2012. On Friday, shares finished at $9.15, a 5% rise from Thursday and up 28% for the year thus far. Castle Union told The Deal last month that it will launch a proxy fight and nominate at least four board members if Procera doesn't publicly start a strategic review process by the end of January"
See "Networking Company Could Sell to Allot, Sandvine, F5, Cisco or Ericsson" - here.