Sources have told CDN that there is an agreement in place for Cisco Systems to acquire security vendor Sourcefire.
The total value of the deal is approximately $2.7 billion. One source told CDN that this deal has a complex structure. Cisco has confirmed that it will pay $76 per share in cash in exchange for each share of Sourcefire. The San Jose, Calif.-based networking vendor will also take on some equity as well.
One Canadian executive told CDN that the price for Sourcefire was “too high” to pay for what the company is. Sourcefire specializes in intelligent cybersecurity predominantly for the mid-market, which is a space Cisco has been targeting for years. The Columbia, M.D.-based security vendor also sells to the government and some large enterprises. In its last annual fiscal report, Sourcefire revenue was just over $223 million. The stock price is hovering around $75.
Christopher Young, senior vice president, Cisco Security Group, defended the deal saying in a blog post that the notion of a secure perimeter no longer exists. Today’s sophisticated threats are able to circumvent traditional, disparate security products. Organizations require continuous and pervasive advanced threat protection that addresses each phase of the attack continuum.
“With the acquisition of Sourcefire, we believe our customers will benefit from one of the industry’s most comprehensive, integrated security solutions – one that is simpler to deploy, and offers better security intelligence,” he said.
The plan for Cisco is to use Sourcefire technology for its advanced threat protection products across the entire stack for any device or cloud service.
According to Cisco, mobility, cloud and $14 trillion “Internet of Everything” opportunity are changing today’s IT security landscape, making traditional disparate products insufficient to protect organizations from dynamic threats. With Sourcefire’s automated security, it provides Cisco with threat detection and protection technology that includes next-generation intrusion prevention systems, next-generation firewalls, and advanced malware protection.
The acquisition is expected to close during the second half of calendar year 2013, subject to customary closing conditions and regulatory reviews. Cisco expects the acquisition to be slightly dilutive to non-GAAP earnings in fiscal year 2014 due to normal purchase accounting adjustments and integration costs. Once the transaction closes, Cisco will include Sourcefire into its guidance going forward. Prior to the close, Cisco and Sourcefire will continue to operate as separate companies. Upon completion of the transaction Sourcefire employees will join the Cisco Security Group under the direction of Young.
