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McAfee buys data protection expertise with SafeBoot acquisition.

McAfee : 09 October, 2007  (Company News)
McAfee will swallow Safeboot in a cash bid to acquire expertise in end-point encryption and data protection to supplement McAfee DLP expertise.
McAfee has announced a definitive agreement to acquire privately owned SafeBoot for $350 million in cash. SafeBoot is an enterprise security software vendor that is a leader in the rapidly growing market for data protection via encryption and access control.

SafeBoot delivers enterprise-class encryption and leads the mobile security market with its fully integrated end-point security and content encryption solutions. Adding SafeBoot's technologies and products will extend McAfee's Security Risk Management vision, and position McAfee as the leading security vendor to offer data loss prevention and encryption at the end-point with scalable centralised management.

The rationale for the transaction is as follows:.

* With the acquisition of SafeBoot, McAfee becomes the leader in a multi-billion data protection market that is highly under-penetrated.
* McAfee has more than 100 million desktops under management and believes SafeBoot offers a strong complement to its existing offerings.
* SafeBoot's end-point encryption franchise coupled with McAfee's Data Loss Prevention and ePolicyOrchestrator management capability creates a compelling, industry-leading data protection solution.
* McAfee, with its worldwide distribution network, expects to leverage SafeBoot's highly acclaimed product line which is currently offered in over 20 languages and in 76 countries.
* Encryption addresses all three of McAfee's market segments from the enterprise of one to the enterprise of thousands.
* Finally, SafeBoot's mobile phone offerings will help accelerate McAfee's current mobile solutions by allowing McAfee to offer a new comprehensive suite of integrated device protection and data security.

"SafeBoot's industry-leading mobile security solutions address a critical pain point for customers - the protection of confidential and proprietary information," said Dave DeWalt chief executive officer and president of McAfee. "With the acquisition of SafeBoot, McAfee becomes a leader in the fast-growing $1 billion encryption market and we will be able to offer a complete data protection solution that combines SafeBoot's device, full-disk and content encryption with McAfee's data loss prevention solutions. This combination helps advance our Security Risk Management strategy and extend our leadership at the end-point."

"We believe this acquisition will deliver a very attractive return for our shareholders," said Eric Brown, chief financial officer and chief operating officer, McAfee. "The combination of these two companies creates opportunities to build top-line synergies and generate additional growth by leveraging the combined product, technology and sales and marketing capabilities of both companies, to deliver best-in-class data protection."

Based on conservative assumptions, McAfee expects this transaction to be dilutive to 2008 GAAP earnings per share and neutral to 2008 non-GAAP earnings per share. Following the closing, SafeBoot's technologies and McAfee's Data Loss Prevention solutions will become the foundation for a new Data Protection product business unit, headed by Gerhard Watzinger who will report to McAfee CEO Dave DeWalt.

SafeBoot is the encryption vendor to more than 4,200 customers, including more than 150 listed in the Fortune 500. Its customer base is geographically diverse, with about 47 percent in Europe, the Middle East and Asia, 29 percent in North America, and 23 percent in Asia Pacific. The company retained almost all of its customers in 2006.

The SafeBoot Data Protection Suite enables users to encrypt individual files and folders as well as the entire local hard drive for the widest possible range of mobile devices, including laptops, smart phones, USB drives and PDAs. SafeBoot data protection suite also enables users to encrypt file servers and provides protection to ensure that confidential files remain secure as they move throughout an organisation. The company has focused on the enterprise market and offers centralised management as well as the ability to integrate with existing IT systems, support for a wide range of platforms, multiple languages and comprehensive auditing. McAfee plans to integrate these products into ePolicy Orchestrator (ePO), McAfee's centralised management console for enterprise customers.

By adding SafeBoot's encryption technology and enterprise management tools, McAfee will further advance its enterprise data protection offerings, and pursue SafeBoot's significant and untapped opportunities in the SMB and consumer markets. This combination will enable McAfee customers to deploy encryption technology that is integrated with McAfee security solutions, while providing SafeBoot customers with the ability to integrate McAfee products into their current SafeBoot deployment.

"We view McAfee as the leading dedicated security company, and we believe this combination will result in tremendous opportunities for SafeBoot, our customers, and our employees," said Gerhard Watzinger, chief executive officer of SafeBoot. "As we combine McAfee's resources and SafeBoot's technology and capabilities, we will be even better equipped to help our customers address the complex challenges of managing their data security, and position both companies to capture new opportunities in our rapidly growing markets."

"We're delighted that Gerhard and his team will be joining McAfee and we believe that the talent and know-how of SafeBoot's employees will play an important role in our future success," said DeWalt. "The new product business unit will build on both companies' data protection offerings, helping us integrate and deliver market leading new solutions for data protection."

The acquisition is expected to close in the fourth quarter of 2007 pending regulatory reviews.
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