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Data Centers

CyberGuard Locks Onto SCUR

Ft. Lauderdale security vendor says it had Secure Computing under surveillance before making an offer
July 13, 2004

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.

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