SCUR Snaps Up CyberGuard

Security rivals Secure Computing and CyberGuard patch things up in $295M deal

August 19, 2005

2 Min Read
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What a difference a year makes. In a bizarre twist to one of last years more protracted M&A negotiations, Secure Computing Corp. (Nasdaq: SCUR) acquired rival security vendor CyberGuard Corp. (Nasdaq: CGFW) on Thursday in a stock transaction valued at around $295 million (see CyberGuard Acquired by Secure ).

The deal follows an unsuccessful attempt by CyberGuard to get its paws on Secure Computing last year (see CyberGuard Locks Onto SCUR).

How times change. CyberGuard’s $300 million bid was in the same ballpark as today’s price, although Secure Computing felt, last year, that the deal was not in the best interests of the company’s shareholders (see SCUR Spurns CyberGuard Suitor)

Yesterday, however, Secure Computing was singing a different tune with CEO John McNulty promising that the deal would be accretive to the company’s earnings two quarters after the transaction closes.

Jon Oltsik, analyst at Enterprise Strategy Group says he's not surprised by this turnaround. “It made sense last year and it makes sense this year,” he says. “They are both firewall companies.”The analyst believes the move also could be a shrewd one when it comes to tackling some of the big name security vendors. “Each of them has a decent installed base on their own,” he says. “Together they can compete with Juniper Networks Inc. (Nasdaq: JNPR) and Check Point Software Technologies Ltd. (Nasdaq: CHKP) much better.”

Secure Computing and CyberGuard also have their eye on an emerging part of the security market known as Unified Threat Management (UTM) -- devices which combine firewall, intrusion detection and prevention, and gateway anti-virus. Analyst firm IDC says that the market for UTM products is growing at the expense of dedicated firewall and VPN devices (see IDC: UTM Captures 12% of Market).

Despite getting the cold shoulder from Secure Computing last year, CyberGuard has kept its eye on the UTM ball. In May, for example, the company launched its new SG565, an all-singing, all-dancing security device geared toward small-to-medium-sized businesses. The company has also been adding to the core content management technology it acquired when it bought WebWasher in 2004 (see CyberGuard Set to Wash the Web, CyberGuard Acquires Webwasher, and CyberGuard Still Stalking Targets).

A spokesman for Secure Computing told NDCF that, as yet, the company has not decided what will happen to CyberGuard’s 280 employees or its headquarters in Boca Raton, Florida. Secure Computing currently has around 380 employees.

However, the combined entity will undoubtedly extend the two firms’ global reach. This would total more than 17,000 customers and 1,000 resellers in more than 90 countries, according to Secure Computing and CyberGuard.The deal is expected to close in November.

— James Rogers, Site Editor, Next-Gen Data Center Forum

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