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Security Industry Experiences Feeding Frenzy
Doug Caverly
Staff Writer
2006-10-02
 Insider Reports RSS Feed
Security companies seeking to be bought out will probably have their wish granted, according to one recent article.
There is indeed "a feeding frenzy among would-be acquisition targets, roiling the industry's waters."
"The fish are jumping in the IT security industry," summarized CNET's Dawn Kawamoto.
Her article on the subject touched on several recent mergers and acquisitions, speculated on future deals, and included a number of quotes from people in the sector.
Why the sudden rush of activity?
Peter Kruper, a Morgan Stanley analyst, volunteered an answer. "Security has gone from a ‘nice to have' to a ‘must have,' and corporate board rooms across America are spending millions to solve the problem," he told Kawamoto.
Midsize companies appear to be the most common targets for acquisitions.
"On one side, you have companies like Cisco (Systems) and Microsoft that will discount the price they charge for security, and on the other side, you have the best-of-breed (niche security) companies," Kruper said.
Katherine Egbert, an analyst for Jeffries & Co., agreed with that assessment. "The healthy premiums paid for RSA and ISS might spur . . . companies in the space to consider selling," she wrote. She singled out the company Check Point as a likely target, "as management - traditionally not a willing seller - contemplates the expensive replacement of several key executives at once."
Other "potential targets" mentioned in Kawamoto's article "include Trend Micro, . . . McAfee and Secure Computing. These are companies that are too small to be a soup-to-nuts security providers, but too large to be a niche player, analysts and bankers noted."
Don't count on seeing McAfee acquired, though.
A security analyst, "who requested anonymity," told Kawamoto, "McAfee would be a target, had it not been for its consumer business. Buyers don't want the consumer side, so maybe it could take the consumer piece private and sell the enterprise business."
Tag: Security Industry
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About the Author:
Doug is a staff writer for SecurityProNews, InternetFinancialNews, SearchNewz, and WebProNews.
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