CyberGuard is offering one share for each share of Secure, valuing the deal at $297m based on yesterday’s closing price. The company claims that, based on initial estimates, it could improve earnings per share by $0.20 through efficiencies.

I had discussed with them the possibility of coming together several times before, but they never thought it was the right time, so I thought I would get a bit more aggressive about it, Clawson told ComputerWire.

CyberGuard said the deal represents a 22% premium to Secure’s shareholders. This is because Secure’s share price took a dive of 36% last Wednesday, after it announced it had missed its sales targets for the second quarter.

That is part of it, Clawson said, when asked about the timing of the offer and Secure’s new lower valuation. But the reality is that putting the share price aside there’s still a lot of synergies for both companies.

Clawson said that initial estimates indicate that a merged company could save $14m a year on R&D, sales and marketing, and the basic administrative costs of running two public companies, by eliminating redundancies.

The product lines are also aligned, he said. Both firms play in the firewall/VPN space, and in the web content filtering space. Secure also plays in the single-use password authentication space, with its SafeWord tokens.

Secure’s CFO Tim Steinkopf told ComputerWire he expected to see the offer letter yesterday. Upon receipt of the offer… our board will conduct the appropriate review, and in due course we will respond, he said.

On the face of it, it looks like a reasonably good match. Both firms are second-tier players, having made more of a name for themselves for selling secure hybrid firewalls, rather than for selling a lot of them.

But it seems possible that Secure will hold out for a better deal. Its shares have traded between $6.11 and $19.95 over the last year. After it announced missed targets last week, its shares dropped 36% to $6.33, having been relatively stable for three months.

The company blamed its second-quarter shortfall on an anomaly in sales to federal government accounts in the US, which were down about 40%, and expressed confidence that the blip would correct itself in future quarters.

For the first calendar quarter of this year, Secure had net income of $2.2m on revenue of $21.2m. CyberGuard posted a loss of $2.1m on revenue of $13.04m. Clawson said that it’s not the end of the world if the deal doesn’t happen.