Aether Systems buys Riverbed for $800 million

Wireless data company Aether Systems, Inc. (Nasdaq: AETH) said Thursday it would buy privately held Riverbed Technologies, Inc., a leader in mobile computing software products for about $800 million.

The stock has been on a nice run since its highly successful IPO.

The agreement calls for Aether to issue about 4.5 million shares of its common stock in exchange for all of the shares of Riverbed Technologies. The value of the transaction is around $800 million based on Aether's Feb. 9 closing price. Aether will also reserve approximately 900,000 shares for issuance on exercise of options that replace outstanding Riverbed options.

The deal will strengthen Aether's technology offerings in the mobile computing market. Riverbed's suite of software products, "ScoutWare," combined with Aether's wireless middleware (Aether Intelligent Messaging or AIM) and Enterprise Data Wireless Center will give Aether a one-stop source for mobile computing. Riverbed's ScoutWare software operates in both a wired and wireless environment and is compatible with Aether's AIM middleware.

Riverbed's software has been accepted as a standard in mobile computing, and the company also has some significant partners and clients, which will expand Aether's distribution channels. Riverbend's customers include MCI (Nasdaq: WCOM), Sony (NYSE: SNE), Oracle (Nasdaq: ORCL), AT&T (NYSE: T), U.S. Postal Service and the Defense Department. It also has parterships with Palm Computing, soon to be spun-off from 3Com (Nasdaq: COMS), AT&T Wireless Services, Novatel Wireless and Metricom (Nasdaq: MCOM).

The deal, subject to regulatory approval, is expected to close by March 15.