Riverbed Technology has entered into a definitive agreement to acquire OPNET Technologies.

The acquisition will enable Riverbed to extend its network performance management (NPM) business into the multi-billion dollar application performance management (APM) market.

The combination of Cascade and OPNET will create a new force in the converged market for NPM and APM, with over $250 million in annualized revenue.

Networks and applications are required to work together to deliver the performance business users demand. The addition of OPNET’s broad-based family of APM products enhances Riverbed’s position in the NPM market.

“The addition of OPNET establishes Riverbed as the clear leader in the high-growth and converging application and network performance management markets,” said Jerry Kennelly, Chairman and CEO at Riverbed. “This acquisition also transforms Riverbed into a billion dollar revenue company.”

“Riverbed and OPNET have natural synergies,” said Marc Cohen, OPNET’s Chairman and CEO. “Riverbed’s leadership in accelerating business technology combined with OPNET’s industry-leading suite of APM products provides customers with a single solution for monitoring, troubleshooting and actually fixing the application and network performance problems challenging them today.”

OPNET will be combined with Riverbed’s Cascade business unit.

The purchase will be for $43 per share in cash and stock, representing an equity value of $1 billion and an enterprise value of $921 million. The transaction is expected to be accretive to Riverbed’s 2013 earnings per share on a non-GAAP basis. Leveraging the Riverbed brand, channels and infrastructure, Riverbed expects meaningful revenue and operating synergies in 2014.