Forwarded From: darek milewski <darekm@cmeasures.com>
http://www.news.com/News/Item/0,4,29749,00.html?st.ne.ni.lh
Consolidation marches through Net security
By Tim Clark
Staff Writer, CNET News.com
December 9, 1998, 6:00 p.m. PT
A new wave of acquisitions, this time among smaller companies, is
moving through the Internet security industry, with one acquisition
yesterday, another today, and reports of merger talks between two European
firms.
CyberSafe, run by ex-IBM and Perot Systems exec Jim Cannavino, today
announced it has acquired Canadian encryption firm Sagus Security in a
deal for an undisclosed amount of cash and stock.
Yesterday Alladin Knowledge Systems purchased eSafe Technologies, an
Israeli firm with a Seattle sales office that has software to block
hostile Java applets, for about $11 million in cash and stock.
Today British encryption firm Zergo Holdings Plc said it's in merger
talks with Baltimore Technologies, an Irish digital-certificate company
that just opened U.S. operations, according to Bloomberg News.
The three deals reflect a number of themes in the continuing
consolidation of Internet security firms, the most important being that
one-product companies are being swallowed by larger firms with better
distribution. In addition, Internet security firms are trying to bolster
their security consulting forces to help companies integrate complex
technologies.
"There is tremendous demand for computer security consulting," said
CyberSafe's Katherine Hutchinson, vice president of marketing. The
purchase of Sagus, a privately held firm that like CyberSafe has annual
revenues of more than $10 million, also gives CyberSafe a distribution
network in Europe and an East Coast foothold to use for customer support
for European customers.
Larry Dietz, security analyst at Current Analysis noted eSafe's
problems with catching hold in the market, though it has around $5 million
in annual revenue.
"While eSafe was able to establish its technology, it was never able
to jump over the hurdle of distribution, and Aladdin is a longtime player
in the security world," said Dietz, noting that Aladdin's main business is
software license management. The Israel-based firm is expected to hit
around $40 million in revenue next year.
Zergo, the British firm now talking with public-key infrastructure
player Baltimore, in September signed a marketing partnership with Unisys.
"Some companies are reluctant to seek an initial public offering in
the current climate so a merger like this would be a good way for
Baltimore to gain access to capital," said Jemma Houlihan, a technology
analyst at ABN Amro..
Zergo, which is traded publicly in London, earlier acquired Security
Domain, which has e-commerce software. Baltimore is a privately owned
Irish company in which Irish financier Dermot Desmond holds a 60 percent
stake.
In September, President Clinton and Irish premier Bertie Ahern signed
a joint statement on Internet commerce using Baltimore Technology's
digital signature system.
Bloomberg contributed to this report
-o-
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Received on Fri Dec 11 18:55:02 1998