UPDATE 1-FireEye prices secondary offering at $82 per share
By Joseph Menn and Varun Aggarwal
March 7 (Reuters) - Network security company FireEye Inc and its investors sold a second round of shares to the public on Friday to finance expansion and cash in on enthusiasm for its offerings.
FireEye priced the follow-on public offering of 14 million shares at $82 per share, raising about $460 million. Only 5.6 million shares were sold by FireEye, with the rest offered by the company founder and other investors.
The proceeds for FireEye dwarf the amount raised in the initial public offering in September, but the price set late Thursday was less than recent trades in the stock, and FireEye dropped about 9 percent.
Helped by the recent acquisition of high-profile security forensics company Mandiant, FireEye shares are still four times the IPO price.
FireEye Chief Executive Dave DeWalt told Reuters that the secondary price was set low to attract longer term value investors. He said some of the proceeds would replenish the more than $100 million cash component of the Mandiant purchase.
Much of the rest will go toward increasing the presence of the combined company overseas, where sales have risen to 30 percent of the total.
"You will probably see us almost double the countries we're in from 40 to 80 by the end of this year," DeWalt said. "We're going to be very aggressive."
DeWalt and Chief Operating Officer Kevin Mandia, who founded Mandiant and oversaw its investigations of sophisticated state-sponsored Internet espionage, said FireEye had great opportunity in countries under pressure from more powerful nations in Asia, Eastern Europe and the Middle East.
"We want to be in those hot zones," Mandia said. "We're seeing a shift to more ideological conflict."
DeWalt said FireEye does business in both Russia and Ukraine, two countries with well-developed hacking communities, and that it is seeing some sophisticated attacks on the telecommunications infrastructure in Ukraine.
He said new and even more impressive penetration will likely occur if the overall conflict escalates, including attempts to surveil the population to determine individual allegiances.
FBR Capital Markets raised its price target for FireEye stock to $105 from $90 on Wednesday, citing increased confidence in the business from recent data points and the removal of the "secondary offering overhang."
FireEye, which has reported losses since going public, had a wider adjusted loss of $40.5 million, or 35 cents per share, for the fourth quarter ended Dec. 31.
The company last month launched intrusion prevention systems, putting itself in direct competition with Cisco Systems Inc and Palo Alto Networks Inc. The product helps companies detect cyber threats that breach their firewalls.
Morgan Stanley & Co LLC, Barclays Capital Inc, JPMorgan Securities LLC, and Goldman, Sachs & Co were the lead bookrunners for the secondary offering.
FireEye shares were down $8.23 to $81.32 in late afternoon Nasdaq trading.