In a conference call Wednesday, Computer Associates executives detailed how the company plans to incorporate Netegrity’s Web access control, identity and provisioning products into CA’s own eTrust Identity and Access Management Group.
CA will pay $10.75 per each Netegrity common share, which closed the trading day Tuesday at $7.75 a share. The deal is valued at $430 million, or approximately $340 million net of the cash and marketable securities on Netegrity’s balance sheet.
Barry Bycoff, Netegrity chairman, president and CEO, said the company has been looking to merge with one of its partners for about five weeks. He says Netegrity technology would improve CA’s ability to secure Web access, with products such as SiteMinder and user provisioning tools Netegrity acquired with Business Layers late last year.
“We didn’t run into CA in the pipeline on our provisioning products. Our technology will be incremental to what they are already doing,” he says. CA executives agreed, saying the addition of Netegrity technology and development resources will further CA’s strategy to provide comprehensive identity and access management products.
“CA’s goal is to be the major leading security management vendor in the industry,” says Russ Artzt, CA’s executive vice president for eTrust Solutions. “The Web security technology will allow us to expand our security tools beyond the enterprise to the extended enterprise.”
Netegrity makes software and technology that allows companies to manage user-identity data, such as logons and passwords, across networks and the Internet. Its products can simplify user management and administration between legacy equipment, Web and service-oriented architectures, an increasingly complex problem as companies introduce Web-based applications and portals for employees, business partners and customers.
Netegrity also offers TransactionMinder, a policy-based product to secure access to Web services; IdentityMinder Web Edition, a role-based user administration and access management product for Web-based applications; and IdentityMinder eProvision, software for creating, modifying and terminating identity-based access to enterprise systems and physical resources.
The deal, which is expected to close in 90 days, will strengthen CA’s authentication, authorization and administration (3A) security products, already a strong line for the company. IDC in 2003 assessed CA’s worldwide security 3A software market share at 16%, and stated that CA’s 3A revenue has increased twice as fast as the overall industry. Company executives in the conference call Wednesday said that more than 17% of all CA’s bookings for the first quarter of 2005 are for security products.
The acquisition would be CA’s biggest in several years. It is the second in three months that CA says will go toward pumping up its security management suite. The company acquired spyware vendor PestPatrol in August and plans to incorporate the PestPatrol products into its eTrust Threat Management software suite, which protects against viruses, spam and inappropriate use of the Web by employees, the company said.
CA expects to complete its acquisition of Netegrity in the next 90 days and said the effect of the acquisition would be “neutral” for fiscal year 2005, and “slightly accretive” by 2006.
Separately, Netegrity also announced preliminary results for its third quarter ended Sept. 30. Netegrity expects total revenue to be in the range of approximately $19 million to $21 million. Based on these estimated revenue, Netegrity anticipates that it will report net income ranging from approximately breakeven to a net loss of $1.0 million.
Paul Roberts of the IDG News Service contributed to this report.
