Elliott Management Corp. has a long history of successfully pressuring publicly traded tech companies that it considers undervalued to seek a buyout. Rarely, however, does the activist hedge fund play the role of acquirer.

Thursday marked one of those occasions. Elliott announced that it has entered an agreement to buy Gigamon Inc., a Santa Clara, California-based provider of network monitoring software for data centers, in a $1.6 billion deal. The price tag breaks down to $38.50 per share, a 7 percent premium over the company’s last closing price before the announcement of the purchase.

Leading the acquisition is Evergreen Coast Capital Partners, the private equity subsidiary that Elliott established in 2015. The group previously teamed up with another private equity firm called Francisco Partners LLC to acquire Dell Technologies Inc.’s software business for $2 billion.

According to Reuters, the purchase of Gigamon marks the first time that Elliott has acquired a publicly traded company all by itself. Anonymous insiders told the news agency that the deal is the product of months-long negotiations which at one point broke off over price disagreements. A separate source pointed to Gigamon’s third-quarter financial results as the factor that drove management to return to the table and eventually accept an offer.

For the three months ended Sept. 30, the network monitoring provider reported that revenue dropped about 5 percent from a year ago, to $79.2 million. Elliott will work to reverse the company’s declines in an effort to realize a return on its $1.6 billion investment.

Isaac Kim, managing director of the hedge fund’s Evergreen Coast group, said his team plans to achieve that “through continued product development, investment in the company’s large community of channel partners and exploring acquisitions to further bolster innovation.”

Elliott has a good amount of work ahead. Besides competition from fellow network monitoring providers, Gigamon is also increasingly affected by the shift from on-premises data centers to the cloud. Infrastructure-as-a-service providers such as Amazon Web Services Inc. are reducing many companies’ need for in-house hardware and by extension the software used to support it.

The hedge fund expects to complete the acquisition of Gigamon in the first quarter of 2018.

Image: Gigamon