Wednesday, July 12, 2006

Secure Computing to acquire CipherTrust | CNET

"Secure Computing said Tuesday that it plans to acquire messaging security firm CipherTrust in a deal estimated at $273.6 million. The deal, which will give shareholders of privately held CipherTrust a 14 percent stake in the combined company, includes $185 million in cash, 10 million shares of Secure Computing stock, and a $10 million note that is contingent upon hitting certain performance goals. CipherTrust CEO Jay Chaudhry will become chief strategy officer as well as the vice chairman of Secure Computing's board when the deal closes, which is expected to be by Sept. 8. "

According to Business Week: The company said it expects the deal, which is seen closing by Sept. 8, to add about $15 million to $20 million in revenue in 2006, and roughly $80 million in revenue in 2007.

Our Take: The deal is dilutive to Secure Computing. SCUR is trading down 38% in after hours trading. CipherTrust, based in Atlanta raised their most recent $42 million round in March 2004 led by Battery Ventures and Greylock with participation from USVP and Moro-Moseley. Overall this seems to be a good deal for VC investors and CipherTrust employees. Look for further consolidation and funding in the security/appliance space.

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