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Secure Computing to acquire CyberGuard

Secure Computing to acquire CyberGuard

Secure Computing announced it had reached an agreement to acquire CyberGuard for approximately US$295 million in a cash and stock transaction, with the merger expected to be completed in the November timeframe following the regulatory approval process.

In acquiring its rival in the firewall and content-filtering arena, Secure Computing expects to see revenue escalate from about US$110 million per year to US$200 million, said Mike Gallagher, senior vice president of product development. While specific product and staff consolidation plans have not been laid out, Secure Computing sees some re-alignments that could result in possible product change and layoffs.

"There is overlap in some assets," said Gallagher, pointing out that Secure Computing's G2 Sidewinder firewall competes directly with CyberGuard's "Total Stream Protection" line of firewalls.

However, CyberGuard's lower-end "SG" line of firewall/VPN products is an area where Secure Computing doesn't compete at all at present.

In the area of Web filtering, Secure Computing has products that do outbound Web filtering only, while CyberGuard's WebWasher is a stand-alone Web filter that also supports anti-virus and anti-spam filtering, said Gallagher. CyberGuard is said to have 21 million licensed seats for its Web-filtering product.

"We're going to offer all these products in the near term but there are redundant capabilities here," he noted. "There are going to be branding changes and new products will almost certainly come out of it. But there's no roadmap yet."

Pat Clawson, chairman and CEO of CyberGuard, issued a statement supportive of the merger agreement, saying it "brings together two successful leaders in IT security technology."

Secure Computing has corporate staff of 380 and 14,000 customers. CyberGuard has 270 staff and has 3,000 customers. Gallagher said CyberGuard is more active in the European sales market than Secure Computing. Although no staff changes are announced, Secure Computing said the acquisition will likely result in some level of consolidation in duplicative administrative functions.

As part of the merger, global private equity investor Warburg Pincus intends to invest US$70 million in Secure Computing in the form of convertible preferred stock with warrants, the firms announced.

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