Secure Computing to buy CyberGuard

Will pay $295M for its rival in the firewall and content-filtering market

Secure Computing Corp. said it has reached an agreement to acquire CyberGuard Corp. for about $295 million in cash and stock.

In acquiring its rival in the firewall and content-filtering market, Secure Computing expects to see its revenue increase from about $110 million per year to $200 million, said Mike Gallagher, senior vice president of product development. The merger is expected to be completed in November, following the regulatory approval process.

While product and staff consolidation plans have not been laid out, Secure Computing sees some realignments that could result in possible product changes and layoffs.

"There is overlap in some assets," said Gallagher, pointing out that Secure Computing's G2 Sidewinder firewall competes directly with CyberGuard's Total Stream Protection line of firewalls.

However, CyberGuard's lower-end SG line of firewall and VPN products is an area where Secure Computing doesn't compete at all.

In the area of Web filtering, Secure Computing has products that do outbound Web filtering only, while CyberGuard's WebWasher is a stand-alone Web filter that also supports antivirus and antispam filtering, Gallagher said. CyberGuard is said to have 21 million licensed seats for its Web-filtering product.

"We're going to offer all these products in the near term, but there are redundant capabilities here," he noted. "There are going to be branding changes, and new products will almost certainly come out of it. But there's no road map yet."

Pat Clawson, chairman and CEO of CyberGuard, said in a statement that the merger "brings together two successful leaders in IT security technology."

Secure Computing has a staff of 380 and 14,000 customers. CyberGuard has 270 employees and 3,000 customers. Gallagher said CyberGuard is more active in the European sales market than Secure Computing.

As part of the merger, global private equity investor Warburg Pincus LLC intends to invest $70 million in Secure Computing in the form of convertible preferred stock with warrants, the companies said.

This story, "Secure Computing to buy CyberGuard" was originally published by Network World.

Copyright © 2005 IDG Communications, Inc.

  
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