Internet security company Check Point (Nasdaq: CHKP) has announced that it has offered to buy Protect Data AB (SAX:PROT) of Sweden. The offer is 180 Swedish kroner per share, for a total cash price of about $586 million. The price represents a premium of 39% over the average closing price of Protect Data's shares during the last 90 trading days.
Protect Data is the 100% owner of Pointsec Mobile Technologies AB, which provides data security on laptop and desktop PCs, PDAs and smartphones.
According to Check Point's announcement, the board of directors of Protect Data unanimously recommends the offer, and it is also supported by Protect Data's largest shareholder, Monterro Holding Ltd.
Check Point said that, with the proposed acquisition of Pointsec, it was initiating the next phase of its corporate strategy: the addition of a data security solution layer to extend protection to a company's important information, and that acquiring Pointsec was the first step in Check Point's vision 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," said Check Point CEO Gil Shwed. "This acquisition would be the first step in our strategy for expanding Check Point's unified security architecture into data security. It would result in new market opportunities and provide additional security and value to our customers and partners."
Peter Larsson, chief executive officer of Protect Data, said, "Check Point's substantial industry and channel leadership will allow Pointsec to accelerate its pace of innovation while reaching a global market of partners and customers."
Assuming that it goes ahead, this will be Check Point's first important acquisition after its attempt to buy US company Sourcefire for $225 million was frustrated earlier this year by the US authorities, which refused to approve the acquisition because of security fears - Sourcefire’s product protects US military and intelligence computers. The previous large acquisition by the company was of Zone Labs, which provides network security products for the home and home office, for $205 million in 2004.
In its third quarter financials, Check Point reported that it had $1.6 billion in cash, cash equivalents, deposits, and marketable securities.
In the first nine months of 2006, Protect Data's revenue grew by 92% to SEK 370.8 million or $52.4 million. After tax profit for the first nine months grew by 166% to SEK 58.7 million or $8.3 million.
Check Point very much needs a new acquisition to restart the growth that everyone is waiting for. The company reported $142 million revenue for the third quarter, just 1% more than for the corresponding quarter of 2005, and 2.6% more than for the preceding quarter. The company has not provided clear guidance about how the new acquisition will contribute to growth, but Shwed hopes that it will add $90 million to the company’s top line over the coming year. Company officials say that the acquisition will only contribute to the bottom line in 2008.
“Yes,” said Shwed in response to a question whether Check Point was planning more acquisitions. “What you see now is the expansion of our strategy in our core products. We hope that next year you’ll see a further extension of this strategy, through both products that we’ll develop and through more acquisitions.”
All this depends on the Protect Data acquisition being closed, which is not a certainty. “This is far from a done deal,” says Shwed. “We expect to close the deal in January 2007, but while we’re looking at this as something that’s going to happen, we’re not taking it as a fait accompli, but as something that still needs work. We’re still far from obtaining the 90% of shareholders who must approve the acquisition under Swedish law.”
Check Point said that, as of today, it had the approval of Protect Data’s board for the acquisition, as well as a favorable recommendation of its largest shareholder, Monterro Holding Ltd., which owns 10% of the company.
Published by Globes [online], Israel business news - www.globes.co.il - on November 20, 2006
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