EMC to Buy RSA For $ 2.1 Billion

BOSTON: EMC's has decided to spend nearly $ 2.1 billion for security vendor RSA which, therefore, promises to reshape the competitive landscape of the storage and infrastructure- management segments of the IT industry.

EMC will be paying $ 28 per share for RSA that is a 22 percent premium above RSA's closing price of $ 22.88 per share on Thursday.

Overall, RSA's revenue growth has been flat; 2005 revenue was $ 310 million, up from $ 307 million a year earlier; though profits grew more than 20 percent, to $ 42 million for the year.

However, CEO Joe Tucci expects RSA to be a $ 500 million business in 2007. "We absolutely believe inside the EMC family that will grow up from there."

EMC is certainly not the first to come up with the idea of bringing better security to stored data. Last year, Network Appliance and Symantec made similar moves to bridge security and storage with their acquisitions of Decru and Veritas, respectively. CA and IBM also have broad portfolios to bridge the two together.

At a conference in New York earlier this month, Tucci defined security as one of EMC's five key growth opportunities he envisioned as billion-dollar businesses, the other four being: its VMware infrastructure virtualization business, content management, resource and network management, and storage virtualization. Tucci promised security would encompass everything EMC does across all of its offerings.

"The mandate is clear by our customers," Tucci said last night.

"We need to make sure the information itself is protected. We need to make sure it can be encrypted. We need to be able to encrypt at rest, in-fight, online, on disk, on tape across networks -- in other words, wherever digital information lives."

He also mentioned that EMC needs to do that with centralized key management software, identity-management control and authorized access to that information.

"These are the things that RSA brings to EMC," he said.
RSA will become the security division of EMC, which will be headed by Art Coviello, RSA's president and CEO.

In view of Coviello, the deal will let RSA fulfill its vision with the resources it lacked as a standalone company.

"We will be able to continue to fulfill our vision of protecting online identity and digital assets while leveraging the financial strength of EMC," he said. "More important is EMC's solution and expertise in information lifecycle management."

According to EMC, in an insecure technology-driven business world faced with a constant barrage of new attacks and an ever-growing regulatory compliance burden, information-centric security makes a heck of a lot of sense.