SecureData, a member of the JSE-listed ERP.com Group and the distributor for RSA Security products in Sub-Saharan Africa, today announced that it has acquired PassMark Security, Inc, a privately held company based in Menlo Park, California. PassMark delivers robust software-based authentication to millions of users worldwide, through some of the largest consumer-facing financial institutions.
RSA Security purchased PassMark for total consideration of $44.7 million, which consisted of $9 million in cash and the issuance of approximately 2 million shares of RSA Security common stock (based on the average of the prior 30 days' closing stock price as quoted by The NASDAQ Stock Market).
For purposes of generally accepted accounting principles (GAAP), this transaction will be accounted for as a purchase, and the securities issued will be valued based on the average of the closing stock price on or around the closing date; as a result, for GAAP purposes, the merger consideration is currently estimated to be approximately $48.2 million.
In addition, RSA Security is setting aside $2.7 million to fund employee retention plans and termination costs. The company will also reserve approximately 80 000 shares of its common stock related to the assumption of PassMark's stock option plan.
RSA Security expects this transaction to add in the range of $4 million to $5 million in revenue over the remainder of 2006 and in the range of $10 million to $15 million in revenue in 2007. Additionally, the company anticipates the acquisition will be mildly dilutive in the second and third quarters of 2006 and accretive beginning in the fourth quarter of 2006.
"As financial institutions of all sizes race to address the regulatory community's guidance on stronger authentication, this acquisition, with its ability to expand the RSA eFraudNetwork, will broaden our distribution network, and add deep domain expertise in consumer authentication, and, significantly strengthens our position in the market," commented Art Coviello, President and CEO of RSA Security. "Since our successful acquisition of Cyota and the great traction we are gaining in the marketplace, we have become even more bullish about our opportunity."
The acquisition of PassMark will extend and broaden RSA Security's channels-to-market in the financial sector by adding further depth to a growing distribution network, and customers and prospects of both organisations are set to gain from an expansion of RSA Security's sales, implementation and support teams. RSA Security believes the acquisition will strengthen its move to establish itself as a strategic hub for the financial marketplace, providing the ability to authenticate and protect all aspects of online banking and e-commerce: end-users, merchants and transactions.
"RSA Security has clearly differentiated itself in the authentication market with a broad-based, adaptive approach," continued Coviello. "Now we are gaining from the addition of more than 20 leading financial institutions to our consumer online banking portfolio and the deep market knowledge and experience of this group."
The deal further enhances RSA Security's broad consumer identity protection portfolio that features a comprehensive range of authentication options and anti-fraud capabilities. It also gives more than 20 leading financial institutions the ability to contribute information to the RSA eFraudNetwork, the world's largest cross-bank collaborative anti-fraud community, which in turn can benefit their tens of millions of online banking customers by protecting them from online fraud. The network tracks online criminal behaviour across banking institutions, around the globe, enabling the company to protect all the businesses on the network from fraud attempts in real-time. All expansion to the network helps to make its anti-fraud capabilities and reach more effective and more pervasive, to the benefit of every member.
RSA Security is also acquiring PassMark's proven solutions that are currently protecting millions of online users worldwide every day. These include: a two-factor authentication solution that authenticates each user to a Web site based on a password and specific positive device forensics, and, at the same time, authenticates the site to the user with visual images, offering both parties assurances that they are taking part in a legitimate transaction; and a voice-based biometric authentication system that identifies wired and wireless phones in combination with biometric voiceprints to instantly authenticate remote users over the phone. RSA Security will continue to develop and support these products to meet the needs of customers. In addition, the company will leverage these technologies to further enhance its RSA Adaptive Authentication offering, which allows the dynamic tailoring of authentication methodologies according to specific user preferences and scenarios.
"Joining forces with RSA Security is the right move at the right time," added Bill Harris, Chairman of PassMark. "As the industry moves to facilitate the mass-adoption of identity protection solutions, success will depend on the availability of a full suite of authentication offerings, and genuine flexibility and choice for enterprises and their customers. I am delighted that PassMark's technology will form part of a robust and complete solution from RSA Security, with its strong history of technical excellence, customer service and support."
RSA also announced the appointment of Harris to RSA Security's board of directors, effective immediately following the closing of the transaction.
Harris co-founded PassMark and served as the chairman of its board of directors. In an extraordinary career marked by innovation and entrepreneurial achievement, he has co-founded a number of companies and overseen significant growth, expansion and increased profitability during his tenure on the boards of directors of organisations including EarthLink, Macromedia and LowerMyBills.com. Harris has also served as the chief executive officer of Intuit and PayPal.
"We are delighted to welcome Mr Harris to our board of directors," concluded James K Sims, chairman of RSA Security's board of directors. "His deep knowledge of the financial services industry and consumer market, combined with his great experience as an entrepreneur, will make him a valuable advisor to our company. Bill Harris is a man of vision and has an established reputation as one of the leaders of our industry; we are excited about working alongside him as we extend our leadership in the protection of identities and assets online."
For further information, please contact Andrew Ochse at telephone +27 11 257 8600; fax +27 11 257 8699; e-mail andrewo@securedata.co.za.
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RSA Security Inc helps organisations confidently protect identities and information access. The company secures more than 15 million user identities, safeguards trillions of business transactions annually, and manages the confidentiality of data in tens of thousands of applications worldwide. RSA Security's portfolio of award-winning solutions, including identity & access management, secure mobile and remote access, secure enterprise access, secure transactions and consumer identity protection, sets the standard in the industry. Its strong reputation is built on a 20-year history of ingenuity, leadership and proven technologies, and their 17 000+ customers around the globe. Together with more than 1 000 technology and integration partners, RSA Security inspires confidence in everyone to experience the power and promise of the Internet.
SecureData
SecureData, an ERP.com company, is Africa's premier IT security solution provider. SecureData's solutions incorporate anti-virus and content security, network security, intrusion prevention software and network asset management. SecureData's comprehensive "Managed Security Services" include design, audit, implementation, vulnerability assessment, outsourcing and hosting. SecureData distributes, sells and supports category leading IT security products to the public, corporate and SME sectors throughout Africa as well as products and services to the SOHO and consumer markets through partnerships with ISPs. As well as being the sole distributor in Sub-Saharan Africa for Trend Micro, SecureData is the African distributor for US-based TippingPoint Technologies and the southern African distributor for US-based AirDefense, Application Security, eEye, Network Engines, Rocket Software, RSA Security, St Bernard and Websense. For more information, visit SecureData at www.securedata.co.za.
ERP.com
ERP.com is a JSE-listed company focused on the implementation, integration and management of enterprise applications in an e-business environment. For more information, visit ERP.com at www.erpcom.co.za.
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