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CyberGuard bids for Secure Computing

Consolidation play

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Security for virtualized datacentres

Security vendor CyberGuard yesterday launched an unsolicited offer to buy rival Secure Computing with a one-for-one stock exchange transaction offer. The bid - which values Secure Computing at approximately $278m - comes days after Secure posted a profit warning, blaming weak government sales for lowered Q2 revenues of between $21.7m and $22m.

Secure Computing and CyberGuard both have similar product portfolios, focusing on content security and the firewall/VPN appliance markets. A terse statement from CyberGuard fails to say much about the rationale for the bid but our guess would be that CyberGuard is looking to get a hold of Secure's customer base and bulk itself up in a bid to become a more potent threat to large rivals such as Cisco and Juniper.

CyberGuard reckons a merger between the two companies could save an estimated $14m in cost savings per year resulting in increased shareholder earnings of around $0.20 per share, excluding any sales improvements. Secure Computing is yet to respond to CyberGuard's offer. ®

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