SafeNet And Rainbow Plan Merger

Baltimore-based SafeNet will issue 11.1 million shares of its common stock for all Rainbow stock, worth approximately $457 million on a fully diluted basis, based on SafeNet's closing price of $41.02 on Oct. 22.

Both companies have ties to the Defense Department and National Security Agency. SafeNet was founded by former NSA engineers in the late 1980s as Information Resource Engineering, or IRE, which worked with Analog Devices on several generations of security-chip products dubbed SafeNet. In 2001, the company changed its name to SafeNet.

Rainbow, Irvine, Calif., was a key collaborator with NSA in the agency's early 1990s effort to promote the Clipper chip accepted for key-escrow security. The effort failed in the face of widespread industry opposition.

Rainbow has acquired several chip- and board-level security companies and developed a portfolio that included bulk-encryption and Internet Protocol Secure products.

SafeNet Chairman Anthony Caputo said Rainbow will add at least $70 million in government contracts to SafeNet's already significant government business.

This story courtesy of Techweb.com.