BOSTON (Reuters) - Computer security company McAfee Inc MFE.N plans to buy Secure Computing Corp SCUR.O for $465 million, adding specialized equipment that keeps hackers from breaking into computer networks.
The move, McAfee’s biggest acquisition to date, helps the No. 2 computer security company expand the bundle of products it can sell to businesses. The deal also boosts the number of companies that use its products.
The Santa Clara, California-based company said on Monday it will pay $5.75 per share of Secure Computing’s common stock, representing a 27 percent premium to the San Jose, California, company’s closing price of $4.52 on Friday.
Secure Computing shares rose 23 percent to $5.56 on Nasdaq, while McAfee shares fell 1.7 percent to $36.68 in morning trading on the New York Stock Exchange.
McAfee Chief Executive Dave DeWalt said the purchase will help round out McAfee’s line of products that help protect business networks. The company is best known for anti-virus software for PCs.
Since he joined McAfee in early 2007, DeWalt has used acquisitions to beef up its network security products.
So far McAfee only has “a few thousand” network security customers. The Secure Computing purchase will add 22,000 more customers in that area, he said.
“The market is moving toward bigger vendors with broader suites. That just means more dollars for McAfee,” DeWalt said. “That is why we are expanding the portfolio.”
Jefferies & Co. analyst Katherine Egbert said that while Secure Computing has great technology for protecting computer networks from hackers, it has a reputation for being difficult to use.
“Strategically the deal makes a lot of sense,” Egbert said. “But the challenge is going to be getting their products ready for mass distribution.”
Friedman, Billings, Ramsey & Co. analyst Daniel Ives said that the deal makes sense for Secure Computing, which began as a unit of Honeywell in 1984 and developed technology to protect computer systems at the U.S. National Security Agency. It was spun off as an independent company in 1989.
The company had struggled over the past year as it replaced its chief executive and its stock languished, losing more than half its value in 2008, versus a 14 percent decline in the Nasdaq Composite Index.
Ives called the McAfee deal “a better choice (for Secure Computer) than continuing to embark down a bumpy road in a tough macro environment.”
The companies expect the transaction to close at the end of the fourth quarter of this year.
DeWalt said the acquisition will either have no impact on McAfee’s 2009 profit or slightly boost profit for the year.
Reporting by Jim Finkle; Editing by Derek Caney