Check Point Software to acquire
hardware security platform.
20.11.2006
Don’t get excited. That is the news I was
hoping to hear out of the leading software
firewall vendor. But sadly, it is not to be.
The actual head line is “Check Point
to acquire an endpoint encryption vendor as
part of a data protection strategy”.
I guess I have said
everything there is to say in past posts
about decoupling host and network security.
Trying to execute on a
strategy that ties the two together has
historically been doomed to failure. Aside
from the technical issues there is what I
believe an insurmountable business issue.
Firewalls are purchased by the network guys
in the enterprise, endpoint protection
solutions are controlled by the AV guys. You
need twice the sales force and twice the
channel to execute on both. (And
four times the sales cycle time).
But let’s talk
about this deal. Protect Data is a
publicly held company in Sweden, their
PointSec product line has gained
tremendous momentum in the last couple
of years and they are on a run rate to
do $70 million this year. Check Point’s
tender offer is about 8X revenue. That
is steep, but according to one of the
analysts on the Check Point investor
call this morning, Walter Pritchard of
SG Cowan, the market has already traded
ProtectData’s stock over the tender
offer price. So, at least the market
believes Check Point is not over valuing
ProtectData.
As I define the
data protection space: encryption+leak
prevention+ device management, Check
Point is getting two of these elements
with one purchase. ProtectData just
completed an
acquisition of Reflex Magnetics, a
device and port management solution.
Now Check Point
will have to also acquire a leak
prevention company to complete their
data protection strategy. There
are a couple of those based in Israel so
I expect that to be announced fairly
soon.
It is nice that
Check Point has finally articulated
their strategy. I may
have a
problem with that strategy but the
acquisition of PointSec is the right
first step to get into data protection.
Check Point has announced their move in
the mid game. Now let's watch as the
chess pieces arrange themselves for the
end game.
See the publication below
Check Point Software Technologies, one
of the world's largest Internet security
companies, on Monday said it would buy data
security company Protect Data for about $586
million.
The deal values Stockholm, Sweden-based
Protect Data at 180 Swedish crowns per
share. Protect Data's shares closed at
175.50 crowns ($24.79) on Friday.
Protect Data's board of directors
unanimously recommends the offer, and it is
also supported by Protect Data's largest
shareholder, Monterro Holding, which
owns 10.46 percent of the company.
Protect Data is the owner of
Pointsec Mobile Technologies.
Israel-based Check Point said the
proposed acquisition of Pointsec, a provider
of data security on laptop and desktop PCs,
PDAs and smart phones, was the first step in
its strategy to secure all enterprise data.
"With businesses facing increasingly
severe consequences from data breaches and a
stricter regulatory environment, it is
apparent that protection must extend beyond
the infrastructure to the data itself," Gil
Shwed, chief executive of Check Point, said
in a statement.
Pointsec provides automatic data
encryption solutions that provide protection
at the end point.
The expansion of network access to mobile
workers is driving demand to secure all
devices that connect to the corporate
network, Check Point said.
In the first nine months of 2006, Protect
Data's revenues grew by 92 percent to 370.8
million crowns. After-tax income for the
first nine months grew by 166 percent to
58.7 million crowns.
"After an evaluation process of the
strategic alternatives for the company, both
our board of directors and I believe this
opportunity represents the best strategy for
Protect Data, its customers, shareholders
and employees," said Martin Bjäringer,
chairman of Protect Data's board.
Check Point's offer is subject to a
minimum acceptance of more than 90 percent
of all of the shares of Protect Data. The
acceptance period is expected to run from
November 27 to December 22.
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