CyberGuard Corp. (Nasdaq: CGFW) has made an unsolicited offer to buy security company Secure Computing Corp. (Nasdaq: SCUR) in an attempt to boost its product portfolio and increase its customer accounts.
In a letter sent to Secure Computing over the weekend, CyberGuard proposed a one-for-one stock exchange transaction, a deal that equates to about $300 million at Friday's closing price of CyberGuard shares. The move comes just days after Secure Computing made a negative second-quarter earnings forecast, which executives blamed on poor performance in the Federal Government sector.
Although full financial details are yet to be revealed, CyberGuard CEO Pat Clawson told Next-Gen Data Center Forum this morning that his company had been following Secure Computing for the last two years. He also estimates that a merger could provide $14 million in annual cost savings.
On Monday, the market reacted along lines typical of acquisition offers -- driving the shares of the potential acquiree, Secure Computing, up more than 10 percent, or $0.64, to $7.02. Shares in potential acquirer CyberGuard fell nearly 5 percent, or $0.36, to $7.44.
Does such a deal make sense? Jon Oltsik, senior analyst for information security at The Enterprise Strategy Group Inc. believes that it will.