Zix Goes Shopping for Messaging Security Tools

With virus and spam threats putting e-mail security on the front-burner,
Dallas-based message protection specialist Zix Corp. on
Thursday moved to beef up its product set with a $7 million acquisition of
Elron Software.

Zix, which markets software that protects enterprise clients from
viruses, spam and electronic attacks, paid $6 million in stock and a $1
million convertible note to complete the acquisition.

The Burlington, Mass.-based Elron, a subsidiary of Elron Electronics
Industries of Tel Aviv, Israel, also specializes in anti-spam and anti-virus
technology.

With the deal, Zix intends to enhance its protection management offerings
by expanding into URL filtering. The transaction includes Elron’s flagship
Web Inspector filtering and monitoring service that uses rules-based
management to create and maintain an enterprise client’s usage policies.

Web Inspector features rich reporting capabilities and real-time alerts
of policy violations, a key feature in the ongoing battle against malicious
virus attacks. Message Inspector, another Elron product included in the
deal, also adds to Zix’s anti-spam and anti-virus tools and provides an
on-location method for protecting against unauthorized inbound, outbound and
inter-office communications and virus attacks.

“[With this acquisition] we can now offer secure messaging, content
filtering, URL filtering, anti-spam, and anti-virus in a way that best fits
the customer’s needs — on-premise, co-sourced, or fully hosted,” Zix chief
executive John Ryan said in a statement.

He said Zix would continue to focus on providing message security tools
to the healthcare industry but the addition of Elron’s sales team and
distribution channels would push expansion into new verticals. More
importantly, the acquisition is expected to add approximately $1.5 million
per quarter in new product bookings and maintenance renewals.

Elron’s customer base included in the transaction includes big-name firms
like 20th Century Fox, Capital Region Healthcare, JFK Medical Center, New
Mexico Mortgage Finance Authority, Anheuser Busch Companies, Lucent
Technologies and Sony Entertainment.

Founded in 1997, Elron has approximately 37 employees at its Mass.
headquarters.

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