SCUR Spurns CyberGuard Suitor

Secure Computing Corp. (Nasdaq: SCUR) has turned down CyberGuard Corp.'s (Nasdaq: CGFW) $300 million acquisition proposal, but it doesn't look as if the security firm is ready to take no for an answer.

In a statement released this morning, Secure Computing announced that its board unanimously rejected CyberGuards unsolicited offer, after consulting with financial advisor Citigroup and legal advisor Heller Ehrman White & McAuliffe. The proposal “is not in the best interests of its stockholders," Secure Computing directors said.

In a letter sent to Secure Computing last weekend, CyberGuard proposed a one-for-one stock exchange transaction, a deal that was worth about $300 million at Friday’s closing price of CyberGuard shares (see CyberGuard Locks Onto SCUR).

But it looks as if CyberGuard is now prepared to up the ante. In a response to Secure Computing's statement, CyberGuard CEO Pat Clawson said, "We believe that we have a high probability of raising cash that would make this transaction more compelling to the Secure Computing shareholders...

"We remain absolutely convinced that the extraordinary economic synergies that could result from combining these two companies would most certainly be in the best interest of our combined employees, customers and shareholders."CyberGuard had been following Secure Computing for two years, and one analyst we spoke to earlier this week agreed that the two companies’ product lines were a good fit. If the proposal were accepted, he said, CyberGuard would be able to boost its portfolio of security products with Secure Computing’s authentication experience.

The acquisition would also give CyberGuard some added momentum in its target markets -- the largest 1,000 global companies and government customers. Secure Computing already boasts a customer base of 11,000 corporate and government bodies.

CyberGuard is certainly no stranger to making acquisitions. In January last year, the firm purchased certain assets of NetOctave, a manufacturer of security processors and VPN acceleration products (see CyberGuard Buys Piece of NetOctave). Then, last November, CyberGuard acquired SnapGear, a developer of embedded Linux security and edge firewall/VPN security appliances.

More recently, the company bought German content security specialist Webwasher AG for $40 million in cash, CyberGuard shares, and up to an additional $10 million for all of the shares of Webwasher (see CyberGuard Acquires Webwasher).

In early trading this morning, CyberGuard’s stock rose slightly, up 2 cents to $6.74. Shares in Secure Computing also rose slightly, up 12 cents to $6.93.CyberGuard officials did not say when another offer would be made.

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