McAfee to buy SafeBoot for $350 mln
BOSTON (Reuters) - Software maker McAfee Inc (MFE.N) said on Monday it will buy privately held SafeBoot B.V. for $350 million in cash, adding data encryption technology to its line of anti-virus programs and other computer security products.
The move gives McAfee technology to address a problem that has made big news in recent months: data breaches that occur when computers with sensitive information are stolen.
Clothing retailer Gap Inc (GPS.N) last month joined a long list of companies and government agencies that have had to grapple with the issue when it disclosed that a laptop computer containing social security numbers of about 800,000 job applicants had been stolen.
SafeBoot is McAfee's first acquisition since it brought in outsider Dave DeWalt as chief executive in April. McAfee is working to revamp its product line and complete a financial audit that has kept it from filing results for 2006.
As of the end of June, the software maker had a cash war chest of about $1.4 billion on its books that it could use toward acquisitions.
SafeBoot of Nieuwegein in the Netherlands sells software that allow users to encrypt files, folders, entire hard drives or information stored on devices such as mobile phones. Once it is encrypted, data is useless unless it is unlocked with a password.
The market for encryption software products is about $1 billion per year, according to McAfee, which said it hopes to close the deal in the fourth quarter.
McAfee said that, "based on conservative assumptions," it expects the transaction to be dilutive to 2008 GAAP earnings per share and neutral to non-GAAP 2008 earnings per share.
Interest in data encryption software has grown amid a rash of thefts and losses of unencrypted data from corporate and government computers.
Laws in many European countries and at least 39 U.S. states require businesses that lose such data to notify people and companies whose information have been compromised. Such requirements are often waived if the data is encrypted.
McAfee said it plans to incorporate the technology into a wide range of products, including those targeted at consumers, small businesses and large corporations.
When McAfee enters the encryption market, it will compete with PGP Corp, a privately held company that McAfee's corporate predecessor, Network Associates, sold in 2002.
"Customer demand for encryption is much higher today than it was when McAfee sold PGP, so now is the right time to acquire SafeBoot and make encryption a key part of our data security offering," said McAfee spokesman Joris Evers.
SafeBoot has some 4,200 customers, including more than 150 companies listed in the Fortune 500, according to McAfee.
According to PGP's Web site, it has 80,000 customers, including 95 of the companies in the Fortune 100.
