RSA Confirms Buyout Talks

By Matt Hines  |  Posted 06-29-2006 Print Email
The authentication specialist said that it is deep into negotiations for a potential transaction, with experts citing EMC, Microsoft and Symantec as potential suitors.

RSA Security confirmed on June 29 that it may be close to reaching a deal to sell its operations to another company.

While RSA officials refused to comment on the specific details of a potential buyout, it is well known that the authentication technology specialist has been aggressively shopping itself to other companies over the last several months. RSA is considered to be one of the few providers of a full range of authentication management applications that has remained independent, and experts said that standing could arouse the interests of many different types of technology vendors.

The firm issued a statement substantiating rumors that it was working on a deal in response to a New York Times story which speculated that the company was close to finalizing an agreement to be purchased by storage giant EMC, though a spokesman for that company refused to comment on the matter.

"RSA Security is currently engaged in negotiations with parties regarding a potential strategic transaction," the security company said in its statement. "No definitive agreement has been reached. There can be no assurance that any agreement will be reached or that a transaction will be consummated."

The Bedford, Mass.-based software maker said that it does not plan to make future announcements regarding its potential sale until, and if, its directors have finalized such an agreement.

While EMC could make an interesting suitor, some industry watchers observed that RSA may have spoken out based on the fact the several other large technology providers are also still be in the hunt for its assets, namely antivirus market leader Symantec and software giant Microsoft.

Neither of those companies immediately returned calls seeking comment on a potential deal for RSA.

If EMC were to buy RSA, the deal would be seen as a move by the storage market leader to round out its information lifecycle management (ILM) product strategy, through which it seeks to market a full range of data storage and management applications to businesses.

The Hopkinton, Mass.-based firm has made major acquisitions to increase the reach of its storage software business in recent years, including its buyout of Legato Systems in mid-2003 for $1.3 billion, and its move into the enterprise content management space through the acquisition of Documentum for $1.7 billion later that year.

More recently, the company has added security tools to its product range via a deal for Authentica, a privately-held maker of digital rights management security software for an undisclosed sum in March 2006. In May 2006, EMC bought data protection specialists Kashya for approximately $153 million.

Analysts said that a deal for RSA would represent a far more aggressive move into the security space by EMC, that could bring a far more comprehensive security business into its ILM strategy.

"If you look at EMC's overall strategy, the only play that they have yet to make aggressively is on the security side," said Mounil Patel, analyst with Boston-based Aberdeen Group. "They've been giving a lot of lip service to security, but they know it's more important than that and they want to move on it."



 

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