March 3, 2016 / 2:42 PM / in 2 years

Finland's F-Secure looks for cyber growth, acquisitions

HELSINKI (Reuters) - Finnish data security company F-Secure (FSC1V.HE) is seeking to grow in the European cyber security market with the help of acquisitions, its chief executive said.

F-Secure, founded in the 1980’s by Nokia’s (NOKIA.HE) current chairman Risto Siilasmaa, faces tough competition from larger companies such as Britain’s Sophos (SOPH.L) and Russia’s Kaspersky, as well as U.S. market leaders Symantec (SYMC.O) and Intel Security Group (INTC.O).

Speaking at the company’s headquarters in Helsinki, Chief Executive Christian Fredrikson said he saw plenty of demand.

“We see huge demand for corporate cyber security in markets like Germany and the UK... We have public sector clients in Europe and we look for growth in services for defense and police forces,” he said.

Gartner sees the corporate and public sector security market growing by 8 percent annually in the coming years from about $18 billion currently.

Fredrikson added that F-Secure was eyeing possible acquisition targets from companies with reselling channels or technologies that would strengthen its protection tools.

“We are actively looking for (M&A) opportunities to support our growth... We have a lot of talks, but we are looking for deals with the right valuation.”

Last year, F-Secure acquired n-Sense, a Danish cyber security provider for 15 million euros.

Most of F-Secure’s 2015 sales of 148 million euros ($161 million) still came from anti-virus software sales for consumers.

“Majority of F-Secure’s business is in a very mature market,” said Ruggero Contu, Research Director at Gartner.

He said the main challenge for the industry was to keep up with innovation as startups are often first to find new growth opportunities.

“(F-Secure) would need to seek demand in emerging areas, like advanced protection techniques and threat intelligence services.”

    Bob Tarzey, analyst at Quocirca Ltd, noted that to buy market share, one should be ready to spend hundreds of millions of euros.

    “I don’t see where that money’s going to come from (for F-Secure).”

    Analysts estimate that the European background could be an advantage in the race for the government deals.

    “If you’re a European company, you can play the card and say, our data stays in Europe. The public sector would be more interested to that,” Contu said.

    “There’s some value in the argument, but it’s not going to change competitive dynamics dramatically.”

    ($1 = 0.9189 euros)

    Editing by Jussi Rosendahl; Editing by Elaine Hardcastle

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