McAfee to acquire network security provider Secure Computing
In an attempt to give it a bigger presence in the enterprise network security market, McAfee announced today that it was acquiring Secure Computing Group for $465 million, or $5.75 per share plus $84 million for outstanding preferred stock.
Part of the attraction of Secure Computing is that it offers little overlap with existing McAfee Inc. products, said Vimal Solanki, vice president of worldwide solution marketing for the Santa Clara, Calif.-based company. Users can expect to see a suite product for network security similar to McAfee's Total Endpoint Security and Total Protection for Data, he said.
The one main area of overlap is Secure Internet Gateway, a mid-market e-mail security offering, Solanki said. The companies have not yet started the integration phase so it is not clear which product will end up surviving.
Because the integration phase has not started, it isn't clear where layoffs might occur. In a typical acquisition, technical staff in non-overlapping product lines and sales staff would be kept and redundant staff in administrative functions would be let go, and Solanki indicated that was likely.
Secure Computing has 22,000 enterprise customers in 106 countries and 2,000 partners, giving the combined company 125,000 enterprise customers, and 15,000 partners. The company currently has 900 employees, primarily in Minnesota and San Jose, and the companies have not yet decided whether to keep the Minnesota location, he said. "We didn't do this for cost synergy," he said. "We did it to enter new markets and broaden our portfolio."
Dan Ryan, Secure Computing's chief, will join McAfee as head of its Network Security group.
The all-cash stock price is a 27% premium over the price of the stock on Friday, which Solanki said was because the Secure Computing management team saw an opportunity with McAfee to grow their business, which Ryan confirmed in a conference call with financial analysts this morning. Secure Computing stock shares have fallen 53% this year, but Solanki said he hadn't looked at the stock. "They have a solid foundation business regardless of the stock price."
Both companies await regulatory approval from the Department of Justice and the Federal Trade Commission under the Hart-Scott-Rodino Act, but do not anticipate any problems because of the low amount of product overlap, Solanki said.
At an acquisition cost of essentially $2,300 per customer, the question becomes whether Secure Computing's existing products are so good that McAfee's marketing can make that up.
"Basically, as mergers go this one probably has an above average chance of succeeding, at least from the perspective of the combined network security product line," Pescatore told BetaNews this morning. "SCC [Secure Computing] and MCAF [McAfee] will also have a very strong presence in US government markets, which are likely to be the most stable in this volatile economic environment.
"Our worries are that, just as Symantec found it tough to be strong in network security and the base end point protection business (and Symantec got out of network security), MCAF will hit the same business problems," he continued. "Also, MCAF has not been very fast in integrating previous acquisitions and bringing them into management under their EPO console -- this one will be even more challenging."