Secure Computing swallows CyberGuard

Secure Computing has signed a definitive agreement to acquire rival security player CyberGuard for approximately US$300m. Secure Computing says the move will create a leader in the unified threat management (UTM) market.

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By  Simon Duddy Published  August 18, 2005

Secure Computing has signed a definitive agreement to acquire rival security player CyberGuard for approximately US$300m. Secure Computing says the move will create a leader in the unified threat management (UTM) market. The move is evidence of an increasing trend towards consolidation in the overcrowded security market. Many second and third tier players will have to merge if they are to compete with tier one players in the long term. Ironically, Secure Computing rejected a takeover bid of approximately the same amount tabled by CyberGuard in July 2004, saying that it did not believe an acquisition was in the best interests of its shareholders. “The acquisition of CyberGuard will bring together two companies with highly complementary strengths and market synergies, and will allow us to accelerate our strong pace of success over these last few years,” says John McNulty, chairman, president and CEO of Secure Computing. “This transaction meets important strategic priorities and better positions Secure Computing in two of the fastest growing markets of the security industry,” he adds. Secure Computing also says the move will accelerate its ability to further penetrate the secure content management market and positions it as the number two player in web filtering, with approximately 21 million licensed seats. The vendor says the combined company will benefit from a stronger and more attractive worldwide geographic footprint that includes 680 employees, more than 17,000 customers and 1,000 resellers in more than 90 countries. The company also expects more opportunities to cross-sell all of the company’s innovative products – including SafeWord and CyberGuard’s SG Series – to both current and prospective customers. In connection with this transaction, Warburg Pincus, the global private equity firm and a leading investor in technology companies, will invest US$70 million in Secure Computing in the form of convertible preferred stock with warrants.

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