Cisco fixes IronPort deal at $830 million

The worldwide leader in networking, Cisco Systems, Inc. on Thursday announced its definite intentions of buying IronPort Systems, a maker of e-mail and Web security software, for $830 million in cash and stock.

The second-largest purchase of a privately held company by Cisco (after the purchase of optical networking companies Cerent and Monterey Networks for $7.4 billion in 1999) and the fifth-biggest acquisition in its history, the deal is expected to position Cisco as a potential competitor to traditional security software vendors like Symantec, McAfee and Trend Micro.

This is Cisco's first acquisition of 2007 followed by nine purchases announced last year, each for less than $100 million.

Headquartered at San Bruno, Calif, IronPort Systems, Inc. is a leading provider of messaging security appliances, focusing on enterprise spam and spyware protection.

Under the terms of the agreement the acquisition is expected to close in the third quarter of Cisco's fiscal year 2007. Till then IronPort will operate as a separate business unit in its current headquarters.

Moreover, IronPort's 408 employees, primarily stationed at San Bruno, will make up 25 percent to 30 percent of Cisco's security staff, Richard Palmer, senior vice president at Cisco, disclosed.

The fast growing market share of IronPort was the key behind Cisco’s attraction, Mike Scully, a vice president of Cisco's security technology group claimed. Figures quoted by Gartner Group, a research consultancy firm report 50 to 60 percent annual growth in IronPort's revenues.

Market analysts predict a 40 percent growth in market annually.
IronPort's reputation database was the ‘second major piece’ behind the deal, company officials state. IronPort’s customer base counts nearly 3000 clients, comprising of 38 of the world's top 100 companies including Dell, JetBlue Airways and Cisco itself.

As IronPort’s acquisition puts Cisco in more direct competition with companies that are tackling security from a server-based approach instead of a network-based approach, bigger concerns mount for Cisco.