Packeteer (PKTR), a Cupertino, Calif.-based maker of wide area network optimization products, is getting amorous glances from two of its competitors, Blue Coat Systems and Nortel Networks, according to my sources. Indeed, in a recent 14D9 filing, the company suggested that it had three different suitors. But both Blue Coat (BCSI) and Nortel (NT) declined to comment, citing company policies regarding rumors.

The interest in Packeteer comes on the heels of a hostile takeover bid from investment firm Elliott Associates, which already has a 9.8 percent stake in the company. Elliott offered $5.50 a share for Packeteer, valuing it at $200.8 million, but the WAN company thinks it’s worth more, apparently more like $7-$8 a share. As it noted in a press release in which it rejected Elliott’s offer:

If the Company’s operating plan for fiscal 2008 is achieved, the Board believes that the Company’s stand-alone operations will produce significantly greater value for the stockholders than that provided by the Elliott tender offer.

The frenetic jostling over Packeteer is a sign of impending consolidation in the WAN optimization chunk of the networking food chain. WAN optimization products help accelerate the delivery of enterprise applications that are accessed over the Internet. Riverbed (RVBD), F5 Networks (FFIV), Blue Coat and Packeteer are some of the more well-known known players in the space, but they’re all small and are competing with larger vendors like Juniper Networks and Cisco Systems.

The accompanying graph, however, shows that no vendor is in dominant position. The presence of such a large number of vendors is starting to play havoc on the profitability of these companies.

Timeline of Packeteer takeover bid:

* March 5: Two hedge funds controlled by Elliott Associates make a friendly bid for Packeteer offering a 42 percent premium to its March 4 closing price.
* March 20: Elliot turned hostile and offered $5.50 a share, a premium of mere 6 percent on Packeteer’s closing price on March 19.
* April 1: Packeteer tells Elliott to take a hike (press release).
* April 16: Elliott offer expired.