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Fortinet Completes Meru Networks Buy, Boosts Wi-Fi Portfolio

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Fortinet Inc. (FTNT - Free Report) recently announced that it has completed the acquisition of Meru Networks (MERU), a company which engages in the development and marketing of virtualized wireless LAN solutions.

The acquisition is a positive for the company as it will help Fortinet to expand its solutions portfolio, thereby addressing the $5 billion worldwide enterprise Wi-Fi market with integrated and intelligent secure wireless solutions. We believe that this acquisition will also expand its customer base.

Under the terms of agreement, Fortinet will pay Meru $1.63 per share in cash and $44 million in equity shares. Post-acquisition, Meru will become a wholly owned subsidiary of Fortinet.

Wi-Fi Momentum

The growing momentum of wireless networks is expected to spur future growth of the overall telecommunications industry. Wireless network standards are continuously evolving around the globe to provide faster data transmission speeds.

Large business enterprises generally have a presence in different parts of the world. Thus a strong and efficient wireless network is of utmost importance to these companies in order to maintain seamless connection with remote operation sites.

The U.S. is currently witnessing a boom in Wi-Fi networks. At present, more than 50% data transmission by smartphone users is taking place over Wi-Fi networks. Research firm WeFi Inc. projects that the number of commercial Wi-Fi hotspots are expected to reach 10.55 million in the U.S. by 2018. Meanwhile, cloud-managed Wi-Fi network has become the most efficient technology for large business houses.

The acquisition is in line with Fortinet’s strategy to invest in high-technology, innovative businesses that deliver strong top-line growth and expand margins. It will help the company to expand and accelerate the development of Wi-Fi solutions to offer a secure, continuous user experience – anytime, anywhere. Moreover, the addition of Meru solutions is designed to bring easy deployment, convenience and cost-effective Wi-Fi connectivity to small businesses.

Going Forward

Fortinet provides network security solutions, which include firewall, VPN, application control, antivirus, intrusion prevention, web filtering, anti-spam and WAN acceleration. Despite the continuing macro uncertainty, the company seems positive on a healthy network security market, its product line-up, deal wins and investment plans, which should boost results in the upcoming quarter.

However, continuous investments in research and development and competition from key network security players such as Cisco Systems Inc. (CSCO - Free Report) , Check Point (CHKP - Free Report) , Juniper Networks (JNPR - Free Report) and Palo Alto Networks are concerns.

Currently, Fortinet has a Zacks Rank #3 (Hold).

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