Tuesday, September 14, 2010

HP Buys ArcSight - Hardware Makers Rush to Software Security But At What Price?

HP and ArcSight Inc. yesterday announced that they have signed a definitive agreement for HP to acquire ArcSight, a leading security and compliance management company, for USD 43.50 per share, or an enterprise value of $1.5 billion.

The following is the official company release but does the make sense at 90 timesthe future EBITDA?  I would seriously doubt it. Chipmaker Intel paid $7.2 billion for Mcfee last month with a strategic rationale of being able to embed security sofwtare into the hardware layers in the future. And HP buys ArcSight which makes software that helps monitor human behaviour on computer networks. Once again hardware firms are rushing into software and services overpaying for tiny companies with unproven management and ability to consistently deliver profits. Only two weeks after having paid a fortune for 3Par in an emotional bidding war with Dell, HP makes another outrageously expensive buy. In my opinion, with Mark Hurd gone, undisciplined dealmaking is peaking at HP. However, what is more important is the fdiciary responsabilities of the Board of Directors and of course the shareholders to really hold the management accountable.

Software security is a highly fragmented industry with the largest player being Symantec that has been acquiring companies in the industry with

Here's the company press release following the acquisition:

“From a security perspective, the perimeter of today’s enterprise is porous, putting enormous pressure on clients’ risk and compliance systems”

The combination of HP and ArcSight will improve security, reduce risk and facilitate compliance at a lower cost for customers. ArcSight’s superior technology is highly complementary to HP’s existing security portfolio of hardware, software and services.

Today’s successful enterprises must provide their employees, partners and customers with more access to applications, services and information. This access and connectivity exposes enterprises to escalating threats, increasing complexity and regulatory challenges. Together, HP and ArcSight will be well-positioned to secure even the most demanding environments by delivering:
  • Broader visibility: A comprehensive view of all events across IT operations, security and compliance
  • Deeper context: The ability to detect threats and risks by correlating both activity and state changes in real time
  • Better continuity: A constant feedback loop between build, manage and monitor to ensure that enterprises remain secure
“From a security perspective, the perimeter of today’s enterprise is porous, putting enormous pressure on clients’ risk and compliance systems,” said Bill Veghte, executive vice president, Software and Solutions, HP. “The combination of HP and ArcSight will provide clients with the ability to fortify their applications, proactively monitor events and respond to threats."

“HP’s acquisition of ArcSight will enable the creation of a new type of security solution, one that serves the modern enterprise,” said Tom Reilly, president and chief executive officer, ArcSight. “By combining ArcSight’s Enterprise Threat and Risk Management Platform with HP’s breadth of application development and operations management solutions, HP will be able to offer an integrated security platform that delivers broader visibility, deeper context and faster remediation of enterprise-wide security and risk-related events. In a world where perimeter security is no longer enough, businesses need this holistic approach to securing their networks, applications and sensitive data.”

The acquisition will be conducted by means of a cash tender offer for all of ArcSight’s outstanding shares of common stock. The closing of the acquisition, which is subject to customary closing conditions, is expected to occur by the end of the calendar year.

Tell your colleagues your first heard it on www.akbaspost.com and follow @TheAkbasPost

No comments: