Secure’s board of directors yesterday rejected CyberGuard’s offer of a one-for-one share swap, saying it is not in the best interests of its stockholders, after consultation with banker Citigroup and legal advisor Heller Ehrman White & McAuliffe LLP.
I certainly don’t think it’s dead, Clawson told ComputerWire. They’ve hired a bank, I don’t know why they’d hire a bank unless they plan to do something. We’ll see if we can raise cash to turn this from an all-share deal to an all-cash deal or a part-cash deal.
CyberGuard had about $19m cash on March 31. The deal it proposed to Secure on Monday was worth closer to $300m. The company is in the early stages of talking to several parties about a possible private placement to raise the cash, Clawson said.
Clawson said that both firms are building the same company and that it would make great sense to merge them. Both sell web filtering software, firewalls and VPNs. Secure also offers one-time password tokens.
CyberGuard estimates that the combined company could cut $14m a year through efficiencies in R&D, sales and marketing, and general administrative costs. This would equate to improved earnings per share of $0.20, the company said.
The Monday offer was made less than a week after Secure’s share price took a 36% dive, following news that it will miss its second-quarter revenue target, due to a 40% shortfall in sales to US federal government that the company said was anomalous.
Earlier this week, Clawson said the unsolicited bid was launched in part because of this new valuation, but that the benefits of a merger have been clear for a long time. The two firms have talked informally in the past about a deal, he said.
