[ISN] Consolidation marches through Net security

From: mea culpa (jerichoat_private)
Date: Fri Dec 11 1998 - 15:19:52 PST

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    Consolidation marches through Net security
    By Tim Clark
    Staff Writer, CNET News.com
    December 9, 1998, 6:00 p.m. PT
         A new wave of acquisitions, this time among smaller companies, is
    moving through the Internet security industry, with one acquisition
    yesterday, another today, and reports of merger talks between two European
         CyberSafe, run by ex-IBM and Perot Systems exec Jim Cannavino, today
    announced it has acquired Canadian encryption firm Sagus Security in a
    deal for an undisclosed amount of cash and stock. 
         Yesterday Alladin Knowledge Systems purchased eSafe Technologies, an
    Israeli firm with a Seattle sales office that has software to block
    hostile Java applets, for about $11 million in cash and stock. 
         Today British encryption firm Zergo Holdings Plc said it's in merger
    talks with Baltimore Technologies, an Irish digital-certificate company
    that just opened U.S. operations, according to Bloomberg News. 
         The three deals reflect a number of themes in the continuing
    consolidation of Internet security firms, the most important being that
    one-product companies are being swallowed by larger firms with better
    distribution. In addition, Internet security firms are trying to bolster
    their security consulting forces to help companies integrate complex
         "There is tremendous demand for computer security consulting," said
    CyberSafe's Katherine Hutchinson, vice president of marketing. The
    purchase of Sagus, a privately held firm that like CyberSafe has annual
    revenues of more than $10 million, also gives CyberSafe a distribution
    network in Europe and an East Coast foothold to use for customer support
    for European customers. 
          Larry Dietz, security analyst at Current Analysis noted eSafe's
    problems with catching hold in the market, though it has around $5 million
    in annual revenue. 
          "While eSafe was able to establish its technology, it was never able
    to jump over the hurdle of distribution, and Aladdin is a longtime player
    in the security world," said Dietz, noting that Aladdin's main business is
    software license management.  The Israel-based firm is expected to hit
    around $40 million in revenue next year. 
         Zergo, the British firm now talking with public-key infrastructure
    player Baltimore, in September signed a marketing partnership with Unisys. 
         "Some companies are reluctant to seek an initial public offering in
    the current climate so a merger like this would be a good way for
    Baltimore to gain access to capital,"  said Jemma Houlihan, a technology
    analyst at ABN Amro.. 
         Zergo, which is traded publicly in London, earlier acquired Security
    Domain, which has e-commerce software. Baltimore is a privately owned
    Irish company in which Irish financier Dermot Desmond holds a 60 percent
         In September, President Clinton and Irish premier Bertie Ahern signed
    a joint statement on Internet commerce using Baltimore Technology's
    digital signature system. 
         Bloomberg contributed to this report
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