Kroll buys its way into data recovery market

In an attempt to take advantage of the growth in security and data recovery in the wake of the Sept. 11 terrorist attacks, New York-based Kroll Inc. announced plans to buy Eden Prairie, Minn.-based Ontrack Data International Inc. for $140 million in stock.

The purchase plan, which was approved by both companies' boards of directors, still needs to clear the U.S. Federal Trade Commission and the European Union before it can be finalized, Ontrack President and CEO Ben Allen said this morning. He added that the companies hope the plan will be approved and finalized by next fall at the latest.

The purchase gives Kroll an entry into the data recovery market, which it wanted due to that market's high growth, Kroll CEO Mike Cherkasky said in a conference call yesterday.

"But we are not going to become the industry leader simply by organic expansion, nor could we expand quickly enough to meet potential sales that we were seeing," Cherkasky said. "So we turned to a company we have worked with and admired for years -- Ontrack."

Kroll specializes in a number of corporate intelligence and investigative security services, including employee screening and kidnap prevention, said Kroll spokeswoman Pat Wood.

Allen said that it has developed a strong relationship with many of the nation's top law firms and was looking to expand its business into the realm of data recovery and computer security.

The bulk of Ontrack's business is in data recovery, but the company also makes security software that competes with Corp. and Symantec Corp., Allen said.

"The war on terrorism is not just about guns," Allen said.

Attacks can be made on computer infrastructures and networks, and companies must have greater awareness of their vulnerabilities, he said.

"This is not an issue for the security officer any more. It is an issue at the CEO level," Allen said.

If the merger is approved, Allen said Ontrack will be known as the Data Recovery and Discovery Group of Kroll. He will head the new unit.

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