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Oracle Corp. set to buy Acme Packet for $2.1b

Database giant Oracle Corp. said Monday that it will pay $2.1 billion to acquire Acme Packet Inc . of Bedford, which makes devices that connect Internet-based communication networks to one another and to traditional phone systems.

Oracle will pay $29.25 a share in cash, 22 percent higher than Acme Packet’s closing stock price on Friday. Taking Acme Packet’s cash holdings into account, Oracle will pay a net price of about $1.7 billion. It’s the biggest purchase of a Massachusetts technology company since May of 2011, when Applied Materials Inc., a California manufacturer of chipmaking gear, bought Varian Semiconductor Equipment Associates Inc. of Gloucester for $4.9 billion.

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Both Acme Packet and Oracle declined requests for interviews about the deal, which is expected to close in the first half of the year.

Rumors of a possible Acme Packet deal have been in the air for months. At the Nantucket Conference on Entrepreneurship and Innovation last June, Acme Packet chief executive Andrew Ory said he would be willing to sell the company if the price were right.

“Acme Packet is not for sale, but Acme Packet can be bought, if someone’s going to pay the full current value and enough of the future value,” Ory said. Then in August, a rumor that networking giant Cisco Systems Inc. was planning an acquisition sent Acme shares soaring.

Acme Packet employs about 900 workers and produces obscure but vital products for Internet Protocol networks — communications systems that use the same data protocols that run on the Internet. IP networks can handle all kinds of communications traffic more efficiently than traditional phone networks.

Acme Packet’s chief product, called a session border controller, acts as a sort of middleman between multiple networks. It enables voice, text, and video traffic to move seamlessly between wireline and wireless networks. It also lets companies running private IP networks easily connect them to public phone systems.

Booming demand for IP networks made Acme Packet one of the most successful technology companies in Massachusetts. The company’s stock rose above $80 in the spring of 2011. But a lagging economic recovery led major telecom companies to slash their purchases of new equipment.

Through the first nine months of 2012, the company recorded revenues of $203.7 million but posted losses in the second and third quarters.

But Zeus Kerravala, principal analyst for ZK Research in Westminster, said that Acme Packet is due for a rebound, as telecom companies resume their network upgrades. “I think in many ways Oracle bought Acme at the perfect time,” he said.

“Oracle has been trying slowly to move to the [telecom] carrier market,” said Catharine Trebnick, senior research analyst at Northland Capital Markets in Minneapolis.

Oracle’s databases are already used by the biggest telecom companies. With Acme Packet, Oracle will become involved in routing calls, text messages, and video traffic. That will put the company in head-on competition with Cisco, Trebnick said.

Hiawatha Bray can be reached at bray@globe.com.
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