Security vendor WatchGuard acquired

Private equity fund puts up $151M for device manufacturer

WatchGuard, a maker of multifunction security devices for branch offices, is accepting a deal to be bought by a private investment firm.

The deal, worth $151 million in cash, would make the company a property of Francisco Partners, a $5 billion private equity fund that specializes in technology companies. Francisco would pay $4.25 per share for WatchGuard if shareholders agree to the deal. Watchguard stock was trading about $4.10 per share early Tuesday afternoon.

The buyout "has the potential to give the company a better financial base," says WatchGuard CEO Ed Borey. The company lost $8.2 million in 2005.

WatchGurd makes Firebox security appliances that support firewall, VPN, traffic shaping, Web filtering, virus screening and WAN failover. Some models include wireless access points to establish wireless LANs in branch offices.

One key characteristic of the gear is that it can be upgraded via software licenses to support more simultaneous users. Prices for the equipment start at $480.

Borey says if WatchGuard is bought, it will not change the company's product strategy. "It's business as usual," he says.

Once the deal is completed, which will likely happen in the fourth quarter, Francisco will have the right to keep or change the management team.

In filings with the Security and Exchange Commission, WatchGuard lists as its competitors Check Point, Cisco, Fortinet, Juniper, Nokia SonicWall and Symantec.

This story, "Security vendor WatchGuard acquired" was originally published by Network World.

Copyright © 2006 IDG Communications, Inc.

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