RealTime IT News

Secure Computing Buys Messaging Trust

Secure Computing agreed to acquire messaging security appliance leader CipherTrust for $273.6 million in cash and stock.

CipherTrust's IronMail appliances and TrustedSource firewall software stop inbound messaging threats over e-mail, instant messaging and Web-based mail.

These include spam, viruses, intrusions and phishing, all methods that have been duping computer users on a regular basis and are growing more sophisticated.

CipherTrust's products also help prevent policy and compliance violations associated with sensitive data leakage.

IDC said CipherTrust is the leader in the messaging security gateway appliance market, which is expected to grow to $1.7 billion in 2009.

Appliances are becoming the preferred method of deploying security applications; IDC estimates that 80 percent of all network security software will be piped through an appliance by 2007.

John McNulty, Secure Computing CEO, president and chairman said on a conference call the merger will make Secure Computing the leader in enterprise gateway security, with more than 18,000 customers and 1,700 resellers.

He said CipherTrust's messaging-oriented products will complement Secure Computing's Sidewinder G2, TSP and Webwasher security devices and software pieces, which cover threats through firewalls, identity and access management solutions, content management and filtering.

McNulty added that with threats and attacks targeting applications as well as networks, companies are requiring application gateways with sophisticated content analysis.

"By combining with CipherTrust, Secure Computing will now be able to offer highly differentiated and integrated SCM enterprise solutions and provide customers with the necessary layers of protection to guard against both known and unknown attacks," McNulty said.

"We will be better positioned to help protect our customers' most valuable asset -- their data."

IDC analyst Brian Burke said the deal makes sense given that Secure Computing had no products in the messaging security space.

"IDC believes CipherTrust's messaging security complements Secure Computing's focus on Unified Threat Management, Web filtering and hardware authentication," IDC said in a research note.

"CipherTrust's TrustedSource reputation technology, with its network of thousands of sensors throughout the Internet, will add a new element of sophistication and intelligence to existing UTM and SCM products."

Secure Computing feels that adding CipherTrust now will enable it to better compete with vendors of security products.

The deal comes amid a raft of security consolidation in the past few months.

EMC moved on RSA Security, VeriSign targeted GeoTrust and Microsoft acquired Whale Communications.

Secure Computing could use the boost of a complementary acquisition for other reasons than keeping up with competition in the broad security market.

The San Jose, Calif., company said second quarter earnings would be between $38.5 million and $39 million, less than the $43 million to $45 million the company expected.

Company officials blamed the shortfall on "deal slippage" in the Midwest and eastern part of the U.S., as well as in the Asia-Pacific region.

CipherTrust CEO, chairman and founder Jay Chaudhry will join Secure Computing's board of directors as vice chairman and serve as the company's chief strategy officer.

Secure Computing's bid for CipherTrust will include $185 million in cash, 10 million shares of Secure Computing common stock, and a $10 million seller note that is subject to performance obligations.

The transaction is expected to close by Sept. 8. Secure Computing said it expects CipherTrust to add roughly $15 million to $20 million in revenue in 2006, and $80 million in revenue in 2007.