Microsoft acquires Pelican Security for $1m

Start-up Pelican has developed software to protect websites from attacks and viruses. It was on the verge of bankruptcy a few months ago.

Sources inform “Globes” that Microsoft (Nadsaq:MSFT) has acquired Israeli start-up Pelican Security for $1 million in cash. Under the deal, Pelican’s remaining seven employees, including CEO Gilad Golan, have transferred to Redmond, California. Negotiations on the sale lasted six months, despite the small amount involved. Pelican’s product will reportedly be integrated into Microsoft’s next-generation operating systems.

Pelican has developed software to protect websites from active content attacks and other viruses. Golan and Irit Rapaport founded the company in 1997. Rapaport, a former investment manager at Elisra Electronic Systems, left Pelican last year. Golan earlier co-founded Menta Software.

At its founding, Pelican raised $1.6 million from Israeli security company Memco (which was later sold to Platinum, which in turn was sold to Computer Associates (Nasdaq:CA)), OphirTech, and private investors. The company raised $5 million in 1999 from The Challenge Fund - Etgar, OphirTech, William Harris, and Clal Electronics, and later raised an addition $6 million in bridging loans from existing investors. The company once had 15 sales staff active in the US, and signed a number of contracts, including with Level 3 Communications (Nasdaq:LVLT).

The high-tech crash pushed Pelican into financial trouble. The company was reportedly unable to achieve significant sales, and failed to raise $10 million in a new financing round. Investors provided $2 million in bridging loans in 2002, while simultaneously considering options to sell the company’s technology. Pelican carried out a series of lay-offs in recent years, reducing its staff from 45 to seven.

Microsoft has acquired a number of Israeli companies, including the technology of Panorama Software Systems in 1996, Maximal Innovative Intelligence for $20 million, and Peach Networks for $72 million. Peach Networks was merged with Microsoft’s TV division, which was closed last year.

Published by Globes [online] - - on February 27, 2003

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