Gigamon Up for Sale, Seeks Potential Buyers?

Gigamon (NYSE: GIMO), which makes network management, monitoring and security solutions for large service providers and businesses, apparently has hired Goldman Sachs to help meet with potential buyers and explore a potential company sale, according to Reuters.

Gigamon's tools gives customers visibility into physical and virtual network traffic. The company's service provider tools also work hand-in-hand with security, network and application performance management solutions.

Although IT monitoring, optimization and security are growing markets, Gigamon's growth has been relatively anemic. Revenues were $69.6 million for the quarter ended April 1, 2017, up 4 percent from the corresponding quarterly last year.  The company also had a GAAP net loss of $2.2 million in Q1 2017.

Elliott Management Corp., an activist hedge fund, has been acquiring Gigamon shares and owns about a 15.3 percent stake in the company, Reuters estimated.

Gigamon has been pinning at least some of its growth hopes on new Chief Marketing Officer Kim DeCarlis and new products like the GigaVUE-HC3 visibility node and Inline SSL decryption application, which just debuted this week.

Gigamon: Potential Buyers?

Reuters speculates that either HP Enterprise or F5 Networks could be interested in Gigamon, but I doubt it. HPE, in particular, seems more interested in fast-growth companies focused on hyperconverged infrastructure (HCI) and software-defined capabilities. I doubt HPE CEO Meg Whitman wants to purchase and fine-tune a new asset -- especially when she's already busy overhauling HPE's hardware- and CapEx-dependent product portfolio.

A potential private equity buyout seems far more likely to me. Silver Lake Partners and Thoma Bravo, for instance, both own a range of IT management, security and optimization companies.

Gigamon's current market valuation is $1.44 billion, according to MarketWatch.