Secure Computing last week announced it had reached an agreement to acquire CyberGuard for approximately $295 million in a cash and stock transaction.
By acquiring its rival in the firewall and content-filtering arena, Secure Computing expects to see revenue escalate from about $110 million per year to $200 million, says Mike Gallagher, senior vice president of product development. While specific product and staff consolidation plans have not been laid out, Secure Computing sees some realignments that could result in possible product change and layoffs.
“There is overlap in some assets,” says 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/VPN products is an area where Secure Computing doesn’t compete.
In the area of Web filtering, Secure Computing has products that do outbound only, while CyberGuard’s WebWasher is a stand-alone filter that also supports anti-virus and anti-spam efforts, Gallagher says. CyberGuard is said to have 21 million licensed seats for its Webfiltering product.
“We’re going to offer all these products in the near term, but there are redundant capabilities here,” he says. “There are going to be branding changes, and new products will almost certainly come out of it. But there’s no road map yet.”
Secure Computing has corporate staff of 380 and 14,000 customers. CyberGuard has 270 staff members and 3,000 customers. Gallagher says CyberGuard is more active in the European sales market than Secure Computing. Although no staff changes were announced, Secure Computing says the acquisition will likely result in some level of consolidation in duplicative administrative functions.
As part of the merger, global private equity investor Warburg Pincus intends to invest $70 million in Secure Computing in the form of convertible preferred stock with warrants, the firms announced.
