Secure Computing to Purchase CipherTrust

Secure Computing plans to acquire e-mail security vendor CipherTrust in a deal valued at close to US$274 million.

The acquisition, which is expected to be completed by Sept. 8, will help Secure Computing expand its line of Internet gateway security appliances.

“This transaction provides us with an expanded set of technologies in a market that’s growing,” said John McNulty, Secure Computing’s chairman, president and chief executive officer (CEO). “By combining with CipherTrust, Secure Computing will now be able to offer highly integrated and differentiated SCM [secure content management] enterprise solutions,” he said during a conference call with analysts.

CipherTrust’s IronMail e-mail security appliances are designed to protect e-mail servers from spam, phishing attempts and malicious messages.

Secure Computing also plans to take advantage of CipherTrust’s TrustedSource e-mail reputation system, which gathers information from more than 4,000 gateway appliances in more than 40 countries worldwide. The gateways analyze billions of messages per month, according to CipherTrust.

The combined company will have a sales staff of 300 and boast 18,000 customers and 1,700 resellers worldwide, McNulty said.

Cipher Trust CEO Jay Chaudhry will become Secure Computing’s chief strategy officer. CipherTrust Chief Technology Officer (CTO) Paul Judge will assume the CTO role at Secure Computing.

Under terms of a definitive agreement announced Tuesday, Secure Computing will pay $195 million in cash along with 10 million Secure Computing shares, valued Tuesday at about $80 million.

The deal may be worth less than originally estimated, however, as Secure Computing’s stock (SCUR) dropped nearly 40 percent Tuesday in after-hours trading on news that the company would miss its earnings estimates.

Secure Computing had been hoping to report between $43 million and $45 million in revenue for its most recent quarter, which ended June 30. However, on Tuesday, it revised this guidance downward, saying revenue would be in the range of $38.5 million to $39 million.

The acquisition comes on the heels of Secure Computing’s January purchase of firewall and content-filtering vendor Cyberguard.

During a conference call with analysts Tuesday, McNulty said the Cyberguard acquisition was not to blame for the company’s shortfall, but he admitted that the numbers were bad. “We are terribly disappointed and embarrassed by the shortfall,” he said.

-Robert McMillan, IDG News Service (San Francisco Bureau)

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