Florida-based CyberGuard announced back in April that it was on the lookout for value mergers and acquisitions after a sixth consecutive profitable quarter. However, despite a move up to the Nasdaq market, and two further quarters of profitability, only now has the company opened its wallet.
The $16 million it is paying for Utah-based SnapGear is approximately double the privately held company’s revenue for the last 12 months. Under the terms of the deal, $1.6 million will be paid in cash and the remainder in stock.
The purchase price could rise by $3.2 million worth of stock if SnapGear achieves earnings targets in the next 12 months, with 25% of that to be paid if the company hits $12.5 million and the rest pro-rated for revenue between $12.5 and $15 million.
CyberGuard is confident the purchase will add to its earnings per share once the deal closes, which is scheduled to be before the end of CyberGuard’s current quarter ending December 31.
CyberGuard also gains a focus on the needs of the SME and SOHO markets as well as expertise in the development of embedded Linux for security appliances.
CyberGuard said that SnapGear’s Linux-based OEM business would continue to function independently. Marketing and customer support will also be independent, as will SnapGear’s engineering group.
CyberGuard also said that initially the SnapGear product line would remain separate from its own firewall/VPN appliance line, although it anticipates convergence occurring gradually as targets are met, such as the ability for SnapGear products to be managed by CyberGuard’s Global Command Center management software, and the certification of SnapGear products to Common Criteria certification levels.
CyberGuard also anticipates introducing application-layer processing and intrusion-prevention features to the SnapGear line, it said.
This article was based on material originally published by ComputerWire.
