Secure Computing Buys Messaging-Security Specialist CipherTrust for $273M

By Chris Preimesberger  |  Posted 2006-07-12 Print this article Print

Two medium-size enterprise IT security companies with complementary portfolios join to form a new $250 million entity that will compete with the big guys.

The July 11 merger of two medium-size enterprise data security companies into a formidable, $250 million-per-year corporation could create a new force in the enterprise gateway security market to compete head-on with such established players as Symantec and Trend Micro, analysts say.

Security appliance maker Secure Computing, based in San Jose, Calif., announced after market closing July 11 that it will acquire CipherTrust, a messaging security specialist, for $273.6 million in a cash, stock and credit transaction.

Privately held CipherTrust, headquartered in Atlanta, provides layered security solutions to stop inbound messaging threats such as spam, viruses, intrusions and phishing. It also protects users against outbound policy and compliance violations associated with sensitive data leakage.

Secure Computing has agreed to pay $185 million in cash, 10 million shares of Secure Computing common stock and a $10 million seller note subject to certain performance obligations.

Citigroup, in New York, will finance a $115 million term loan and a $20 million revolving credit facility as part of the merger.

As a result of the transaction, CipherTrust shareholders will have an approximate 14 percent ownership position in Secure Computing.

According to Gartner Group, of Stamford, Conn., the network firewall market for enterprises is a mature yet evolving market that is responding to a continued need for increased integration with other security and network elements, and to interoperate as part of the larger security ecosphere.

For advice on how to secure your network and applications, as well as the latest security news, visit Ziff Davis Internet's Security IT Hub.

Paul Stamp, senior analyst of security at Forrester Research, in Cambridge, Mass., told eWEEK that he would agree that the newly merged company will compete with established market leaders. "I think it makes a lot of sense together: The two companies now have a pretty comprehensive core solution for network and content threat protection—what one lacked, the other has," Stamp said.

The merger also addresses the convergence of threat and messaging management gateways, said Chris Christiansen, program vice president of security products and services at IDC, in Framingham, Mass.

"CipherTrust's messaging security complements Secure Computing's focus on unified threat management, Web filtering and hardware authentication," Christiansen said.

"With messaging increasingly viewed as a critical enterprise application, the ability to secure traffic at wire speeds is a critical business enabler. Moreover, CipherTrust's TrustedSource reputation technology, with its network of thousands of sensors throughout the Internet, will add a new element of sophistication and intelligence to existing UTM and SCM products," he said.

TrustedSource is one of the major technologies CipherTrust brings to the table. It is an intelligent, reputation-based firewall that ranks millions of IP addresses on their history of being used or abused as spam "zombies"—computers that are programmed remotely to serve as unknowing senders of spam by "the bad guys," Jay Chaudhry, CEO, chairman and founder of CipherTrust, told eWEEK.

Read the full story on eWEEK.com: Secure Computing Buys Messaging-Security Specialist CipherTrust for $273M


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