The buy-out of Enterasys Networks gives the company the financial muscle that it needs to compete head on with its competitors, says Martin May, Enterasys Africa director.
Yesterday, the US security and networking manufacturer announced that two private equity firms, The Gores Group and Tennenbaum Capital Partners, had bought out the firm for $386 million (R2.6 billion). Enterasys` board has recommended the deal to shareholders, but it is still subject to regulatory approval.
"We have often been at a disadvantage to our competitors, such as 3Com and Cisco, because of perceived financial instability, but now we are part of a $5 billion group - that should help boost our market perception," says May.
Despite market perception about Enterasys, May claims that it is the second largest supplier of networking systems in the SA market, taking a place just after Cisco. Enterasys` distributor is Duxbury and it has a number of value added resellers.
Flagship Enterasys customers include the Development Bank of SA and diamond mining giant De Beers.
"We play in all the vertical markets, especially mining and government. However, this deal will help us move into other areas where our presence has been a bit weak, such as the commercial banking arena," says May.
Enterasys was originally Cabletron Systems, a company that started in 1983. The company became embroiled in a financial scandal when nine former executives were involved in an alleged scheme to shore up its share price by inflating revenues. Several of the executives, including a former CEO, pleaded guilty.
In 2003 Enterasys agreed to pay $50 million as a settlement to investors.
"That issue has been put behind us and now with this deal we really have the means to go to market," May concludes.
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