Secure Computing Buys Messaging Trust

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

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

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

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.

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