EMC to Purchase RSA for $2.1B

Continuing its multiyear shopping spree, storage giant EMC said Thursday it would acquire RSA Security for about US$2.1 billion.

The acquisition is part of EMC’s ongoing efforts to expand from a storage hardware provider into a one-stop shop for storing, managing, accessing and securing data throughout the enterprise, or what EMC calls ILM (information lifecycle management). RSA will operate as EMC’s information security division, which will be headed up by RSA President and Chief Executive Officer Art Coviello, and headquartered in Bedford, Mass.

EMC has said it is looking to drive ILM development both in-house and through acquisitions. EMC Chairman, President and Chief Executive Officer Joe Tucci said earlier this month that he expects to expand the company’s information security business, along with four other business units, into billion-dollar businesses in the next few years.

RSA’s encryption and key management technologies will form a key pillar of EMC’s data protection strategy going forward, said the company.

“RSA has strength in two areas that are very information-centric,” said Dennis Hoffman, vice president for information security at EMC.

EMC will now work on integrating RSA’s technologies into a common security platform that will underpin all of EMC’s products, Hoffman said. The fact that RSA was already working internally to integrate its core offerings into a common platform was appealing to EMC, Hoffman said.

With EMC’s acquisition of RSA, and its earlier acquisitions of virtualization software vendor VMware and network systems management software maker SMARTS, the storage company has transformed itself into more of a systems vendor, analysts said.

“They have VMware as the virtualization and infrastructure management toolset, and kicking SMARTS in there to do root-cause analysis with hardware and [ensure] reliability and flexibility, and now RSA providing the security piece,” said Charles King, an analyst with market research company Pund-IT.

EMC will pay $28 per share for RSA and assume outstanding options, the companies said. The deal is expected to close in the third quarter or early in the fourth quarter of 2006 following regulatory approvals.

A potential deal between the two had been rumored, and The New York Times reported Thursday that the acquisition was imminent. In after-hours trading, RSA shares (ticker symbol: RSAS) jumped by $3.53 to $22.88, while buyer EMC shares dipped by $0.45 to $10.80.

-Shelley Solheim, IDG News Service (New York Bureau)

Related Link:

• RSA Security Sale Reportedly Near

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