The offer, which was launched at a near 40% premium on the average 90 day closing price of Protect Data’s stock, will bring to Check Point a range of endpoint security tools for protecting data on PCs and mobile devices.
The company said that in incorporating encryption into its existing security architecture, organizations will be able to start deploying, managing and monitoring both data security and network security policies from a single framework.
The acquisition is likely to be viewed favorably because it moves Check Point into the high-growth mobile security sector, and effectively cuts in half the cash mountain the company has amassed.
For several years now Check Point has felt it necessary to have at least $1bn in reserves, making it more susceptible as a takeover target. Currently, the Ramat-Gan, Israel-based vendor has $1.1bn of cash, which is roughly double its 2005 revenue. This deal is said to represent roughly one-third of the company’s free cash.
Protect Data AB has urged its shareholders to accept the offer, and it is expected to close in time to allow the companies to combine during the first quarter of 2007.
Protect Data has been acquisitive itself of late, paying about $24m in cash earlier in the month for Reflex Software Ltd and wholly owned subsidiary Reflex Magnetics Ltd, a UK supplier of end-point security and disk encryption systems. That business was best known for its Reflex Disknet system which uses white list and black list controls to secure removable media and I/O devices on Windows and Novell networks. It also has the Reflex DataVault virtual hard disk encryption system.
As well as hard disk encryption, Pointsec provides various user identification systems that help protect against intrusion and data theft on PCs and storage devices such as USB memory devices and CDs. It also provides protection services to mobile phone operators, handset manufacturers and system integrators.
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The company is based in Stockholm, Sweden and is looking healthy, having reported strong sales growth numbers for the first nine months of 2006 which sae revenue grew by 92% to $52.4m.
Check Point’s core firewall market is mature to say the least, and CEO Gil Shwed said that he has initiated a strategy to expand into data security which includes the proposed acquisition as a first step, suggesting that other M&As might well follow. On a conference call, Shwed confirmed the deal would be one of many steps the company plans to expand its core products and its market position.
Six months ago Check Point had to pull the plug on its previous plan for market expansion, when it canned a proposed $225m merger with Sourcefire Inc, the company formed to commercialize the Snort open-source intrusion detection and prevention software tool.
Check Point walked away from that deal after the proposed acquisition was hauled in front of the Committee on Foreign Investment in the US, the a body of 12 US federal government agencies that reviews the national security implications of foreign acquisitions of US companies or operations.
