SAN JOSE, Calif.--(BUSINESS WIRE)--July 11, 2006--Secure Computing
Corporation (Nasdaq:SCUR), the experts in securing connections between
people, applications and networks(TM), today announced that it has
signed a definitive agreement to acquire CipherTrust, Inc., the global
leader in messaging security. CipherTrust(R), a privately-held
company, provides innovative layered security solutions to stop
inbound messaging threats such as spam, viruses, intrusions and
phishing, and protects against outbound policy and compliance
violations associated with sensitive data leakage.
Secure Computing is purchasing CipherTrust for total consideration
of $273.6 million, which is comprised of $185 million in cash, 10
million shares of Secure Computing common stock, and a $10 million
seller note that is subject to certain performance obligations. As a
result of the transaction, CipherTrust shareholders will have an
approximate 14% ownership position in Secure Computing.
Under the terms of the agreement, Secure Computing has obtained a
commitment for a senior secured credit facility from Citigroup. The
facility comprises a $115 million term loan and a $20 million
revolving credit facility. The transaction is expected to close by
September 8, 2006, subject to any necessary regulatory approvals and
customary closing conditions.
Depending on the closing day of the transaction, Secure Computing
expects CipherTrust to add approximately $15 million to $20 million in
revenue in 2006, and approximately $80 million in revenue in 2007. The
transaction is expected to be breakeven with respect to pro-forma
earnings per share by mid-2007 and accretive to pro-forma earnings per
share in the second half of 2007.
In conjunction with this transaction, Jay Chaudhry, CEO, chairman
and founder of CipherTrust, will join Secure Computing's Board of
Directors as Vice Chairman and serve as the company's Chief Strategy
Officer and a member of the company's senior management team.
"Over the past few months, we have made excellent progress with
the integration of CyberGuard," said John McNulty, chairman, president
and CEO of Secure Computing. "With the brunt of the initial
integration activity now behind us, we believe the time is right to
continue investing in enterprise gateway security, which is
experiencing strong growth. After an extensive review and due
diligence process, we believe CipherTrust is the perfect addition to
According to IDC, the Secure Content Management Appliance market
is expected to grow to $1.7 billion in 2009, a 47% CAGR from 2004
through 2009. In the Messaging Security sub-market, IDC expects this
area to grow to $2.6 billion in 2009, a 31% CAGR from 2004 through
CipherTrust is the current leader (based on 2004 revenues) in the
Secure Content Management Appliance market with 20% market share. Also
as part of the transaction, Secure Computing will become
well-positioned in the Messaging Security Market. According to IDC
data, CipherTrust is currently the clear market leader in messaging
security gateway appliances. Appliances are becoming the preferred
method of deploying security applications within the Enterprise, and
IDC estimates that 80% of all network security solutions will be
delivered via a dedicated appliance by 2007.
"As threats and attacks move from targeting the network to
targeting applications, companies are requiring application gateways
with sophisticated content analysis capabilities," said McNulty. "By
combining the two companies, we will offer highly differentiated
enterprise gateway security solutions that provides customers with
integrated, multi-layer protection for messaging and web
communication. As a result, we will be better positioned to help
protect our customers' most valuable asset -- their data."
"We will also be better positioned to offer our channel partners
more innovative and profitable products to sell to their customers,"
added McNulty. "CipherTrust's unique reputation based security
technology, TrustedSource, will further differentiate us by delivering
the industry's first reputation-based firewall/UTM, web gateway and
identity and access management solution."
To combat the real business risks posed by the growing number of
messaging security threats, CipherTrust pioneered the messaging
security appliance market and created an innovative, layered,
policy-based appliance to protect multiple communication channels,
including email, instant messaging, Webmail, file transfers and HTTP.
CipherTrust's family of products are created to meet the specific
needs of organizations of all types and enable those organizations to
reduce costs and mitigate the risks that are associated with all forms
of electronic messaging.
"We are excited to be joining forces with Secure Computing," said
Jay Chaudhry, CEO, chairman and founder of CipherTrust. "This
transaction brings together two very successful companies that
together can redefine enterprise gateway security."
"The synergies between the two companies are tremendous," said
Chaudhry. "Our products and technologies are complementary, our
channel and selling strategy similar but with little overlap in
channel partners, and our teams have strong domain expertise in
security with an established record for delivering innovative
products. Our combined business will bring focus and innovation of a
start-up and the scale, size and financial strength of a larger
"Secure Computing's merger with CipherTrust addresses the
convergence of threat and messaging management gateways," said Chris
Christiansen, Program Vice President of Security Products and Services
at IDC. "CipherTrust's messaging security complements Secure
Computing's focus on Unified Threat Management, Web filtering and
hardware authentication. With messaging increasingly viewed as a
critical enterprise application, the ability to secure traffic at wire
speeds is a critical business enabler. Moreover, CipherTrust's
TrustedSource reputation technology, with its network of thousands of
sensors throughout the Internet, will add a new element of
sophistication and intelligence to existing UTM and SCM products."
Transaction Combines Two Well-Positioned Companies in the IT
-- Leader in Enterprise Gateway Security
The combined company will be positioned to be the leader in the
enterprise gateway appliances market. This will include a
comprehensive, integrated and unified portfolio of solutions --
ranging from UTM, messaging security, Web filtering and identity
management -- with centralized policy and management capabilities.
Together, these products will address network gateway and application
gateway security for all the major Internet protocols including Web
(HTTP and FTP), email (SMTP and POP) and instant messaging and
identity based access protection.
-- Expanded Product Portfolio
Combined, Secure Computing and CipherTrust bring a common focus
and highly innovative approach to security. Secure Computing's UTM and
SCM appliances provide the full range of content protection features
with world-class firewall, VPN, Web-filtering, and content filtering.
CipherTrust's appliances provide total messaging security for inbound
threats as well as outbound data leakage and compliance violations.
Customers will no longer need to deploy and manage multiple disparate
point products from multiple vendors.
-- Reputation Based Security with Global Intelligence
Central to Secure Computing's technology focus is the ability of
its Sidewinder G2(R), TSP and Webwasher(R) platforms to enable
behavior-based "Zero-Day" attack prevention against previously unknown
network attacks. CipherTrust extends this capability using global
intelligence with its TrustedSource(TM) technology, providing the
leading reputation system based upon real-time intelligence gathered
from a worldwide network of thousands of sensors. Together, the
combined company will be able to integrate the TrustedSource
capability into these products to accurately protect against unknown
-- Greater Opportunity to Utilize Worldwide Distribution Channel
The transaction will provide the opportunity to accelerate
CipherTrust's revenue growth by utilizing Secure Computing's worldwide
distribution channel. In particular, CipherTrust's products will
receive greater exposure with the U.S. Federal Government and in
Together, the combined company will have more than 18,000
customers and 1,700 resellers in 106 countries. The company also will
have greater opportunities to cross-sell all of its innovative
products, including its Unified Threat Management and Identity and
Access Management appliances to both current and prospective
-- Stronger Organization with Complementary Skill-Sets and
Substantial Industry Expertise
Together, Secure Computing will have an organization of highly
dedicated professionals with substantial expertise in the security
industry. In addition to Jay Chaudhry joining Secure Computing as the
Chief Strategy Officer, two CipherTrust executives will become
executive officers and members to the company's senior leadership
team. Paul Judge will join the company as Chief Technology Officer,
and Atri Chatterjee will be appointed Senior Vice President of
The sales and marketing groups consist of security industry
veterans, and the expected synergies between these organizations are
expected to be powerful. The company will have a substantially larger
research and engineering development team, and will be well-positioned
to accelerate its development of new and innovative solutions.
Investor Conference Call
Secure Computing will be hosting a conference call today, July 11,
2006 at 4:30 p.m. EDT (1:30 p.m. PDT) to discuss the details of the
transaction and its preliminary second quarter results. To participate
by telephone, the dial-in number is 1-888-913-9966 and the conference
ID number is 9424477 within the United States. If you are calling from
outside the U.S., the dial-in number is 1-630-395-0017 and the
conference ID number is 9424477. The conference call also will be
available via live Webcast on Secure Computing's Investor Relations
Web site at: www.securecomputing.com.
A rebroadcast of the call will be available at the Investor
Relations section of the Secure Computing web site. In addition, a
telephone replay will be made available through July 19 by accessing,
800-759-4964 for North America or 203-369-3596 for international.
About Secure Computing:
Secure Computing (Nasdaq:SCUR) has been securing the connections
between people and information for over 20 years. Specializing in
delivering the world's strongest security appliances/firewalls,
identity and access management solutions, content management and
filtering solutions, Secure Computing is uniquely qualified to be the
global security solutions provider to organizations of all sizes. Our
more than 17,000 global customers, supported by a worldwide network of
partners, include the majority of the Dow Jones Global 50 Titans and
the most prominent organizations in banking, financial services,
healthcare, telecommunications, manufacturing, public utilities,
education and national and local governments. The company is
headquartered in San Jose, Calif., and has offices worldwide. For more
information, see http://www.securecomputing.com.
About CipherTrust, Inc.
CipherTrust, Inc., the global market leader in messaging security,
provides innovative layered security solutions to stop inbound
messaging threats such as spam, viruses, intrusions and phishing, and
protect against outbound policy and compliance violations.
CipherTrust's integrated best-of-breed capabilities deliver maximum
availability and unmatched security, effectiveness and enterprise
manageability across multiple messaging protocols including e-mail,
instant messaging and Web-based mail. Recognized by IDC as the market
leader for secure content management appliances, CipherTrust protects
the messaging infrastructure of more enterprises than any other
vendor, including more than one-third of the Fortune 500. CipherTrust
is backed by top-tier investors including Battery Ventures and
Greylock Partners. For more information about CipherTrust, please
visit www.ciphertrust.com or call 877-448-8625.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995 The statements contained in this release, which are
not historical facts, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Examples of such forward
looking statements include Secure Computing's belief CipherTrust is an
excellent fit with Secure Computing, the acquisition of CipherTrust
will strengthen Secure Computing's current activities, and that the
merger will add a base of new customers, expand the scope of Secure's
product line, and be accretive to Secure Computing's proforma earnings
in the second half of 2007. These statements are subject to
uncertainties that could cause actual results to differ materially
from those set forth in or implied by forward-looking statements.
These risks and uncertainties include, among others, the following
risks: that the closing will be delayed, that customers and partners
will not react favorably to the merger, risks associated with
acquiring other companies, including integration risks, and other
risks described in Secure Computing's Securities and Exchange
Commission filings, including Secure's Annual Report on Form 10-K for
the year ended December 31, 2005 and its Quarterly Report on Form 10-Q
for the quarter ended June 30, 2006 under the captions "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," Secure Computing does not undertake any
obligation to update these forward-looking statements to reflect
events or circumstances after the date of this press release.
CONTACT: Secure Computing Corporation
Brenda Christensen, 310-455-1948
Jane Underwood, 408-979-6186
SOURCE: Secure Computing Corporation