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EMC Secures RSA for $2.1B

At the end of a day filled with speculation, EMC declared its intention to acquire security software giant RSA for $2.1 billion today after the market closed.

"We think this is going to be a tremendous asset for EMC going forward," said Joe Tucci, the EMC CEO, on a conference call this evening. Tucci explained that EMC has been looking to grow its security revenues for some time, adding that he expects to "start out" at a $500 million run rate next year, following the RSA deal."

EMC will pay $28.00 per share in cash in exchange for each share of RSA and the assumption of outstanding options. RSA's shares traded at $20 when the market opened today and were at $22.88 at the close. The shares cost $2.3 billion but RSA's cash balance of $208 million reduces the price to $2.1 billion. EMC expects the deal to close by early October.

The New York Times reported this morning a deal could be in the works, prompting a halt in trading of RSA shares. RSA then released a statement confirming that it was negotiating a transaction but did not name the company it was talking to.

EMC has been plotting a significant move into security for the past year, and it is a voracious acquirer of companies. CEO Joe Tucci identified security and virtualization as potential target areas during the firm's recent analyst day earlier this month, where EMC was urged to boost its security and digital rights management portfolio. (See EMC Nets nLayers, Scopes Security.) Still, the deal goes against EMC's recent trend of sticking to small deals -- or what Tucci calls "string of pearls" acquisitions.

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