CyberGuard makes bid for Secure Computing

Network security provider CyberGuard has made an unsolicited offer for rival Secure Computing in a move aimed at filling out its product suite and slashing costs.

Florida-based CyberGuard said Monday that it extended a one-for-one stock exchange for Secure Computing on Sunday, which would represent a 22-percent premium to the value of each Secure Computing common share.

The deal would be worth around US$277.5 million based on CyberGuard's closing share price of US$7.80 on Friday.

Secure Computing Chief Financial Officer Tim Steinkopf said Monday that his company had only received an e-mail of the offer and no hard copy, however.

"It would be nice if they sent it to us," Steinkopf said. He added that once they receive the offer they plan to respond "within a handful of days."

He declined to say whether Secure Computing would be amenable to such a bid, but commented that the company's board had a "fiduciary responsibility to shareholders to consider it."

The bid comes one week after Secure Computing warned that its second-quarter earnings, due out July 20, would be lower than originally expected due to slowed sales to the federal government.

CyberGuard said that the timely buy of Secure Computing would allow it to fill out its product portfolio with high-end firewall and Web filtering technology. Additionally, it predicted that the similarity between the two companies would allow CyberGuard to reduce costs by US$14 million, or US$0.20 a share.

In an open letter sent to Secure Computing, CyberGuard Chairman and Chief Executive Officer (CEO) Patrick Clawson underscored the commonalities between the two companies in terms of employees, strengths and cultures, remarking that "we are, in fact, building virtually identical companies." Clawson predicted faster revenue growth and wider market share through the marriage of the two companies.

CyberGuard has gone on a shopping spree over the last 18 months in an effort to round out its product line. In January of last year, it purchased the assets of virtual private network (VPN) acceleration product provider NetOctave, and then in November of 2003, it bought SnapGear, an embedded Linux security and edge firewall provider. And in a move to shore up its content security assets, it purchased Germany's Webwasher in April of this year.

Representatives from Secure Computing and CyberGuard weren't immediately available early Monday to comment on the proposed deal.

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