Sophos Snaps Up German Data Security Company


Security software vendor Sophos will acquire Utimaco Safeware, a Germany-based developer of data security technology, for approximately $340 million, the companies said Monday. Sophos said buying Utimaco would help it expand its security and control product offerings.

Sophos said data loss has joined viruses as a major concern for IT managers and that makes Utimaco's data security technology complementary to Sophos' endpoint security and control solutions.

Sophos said it expects to complete the acquisition in October, after which Oberursel, Germany-based Utimaco will become a new Sophos business unit focused on data security. Sophos also said it would retain the SafeGuard brand for Utimaco's products.

Utimaco develops software for data encryption and central security policy management for securing data while it's stored, in transmission or being used. The acquisition will allow Sophos to offer a line of products that address both external security threats and threats of data loss from careless or malicious actions by employees, the company said.

Market research firm International Data Corp. predicts that the information protection and control market will increase at an annual compound growth rate of more than 33 percent through 2011.

According to the Sophos bid, which will begin in August, the company will make a cash offer of 14.75 Euros for each share of Utimaco stock for an estimated total price of 217 million Euros or $340 million. and#91;Under German law companies cannot formally enter into deals to be acquired until approved by the German regulatory agency Bundesanstalt fur Finanzdienstleistungsaufsicht or "BaFin."and#93;

Sophos also said it has a signed agreement with Investcorp Technology Partners to acquire its 24.99 percent stake in Utimaco.

The two companies are complementary in their go-to-market strategies in that both companies sell exclusively through channel partners. "We're both committed to 100 percent channel models," said Peter Norman, Sophos vice president of product management and corporate development. He said the companies' two channel programs will be combined, but with emphasis on not disrupting business during the transiiton.

Norman said the acquisition would create sales opportunities for Sophos and Utimaco resellers by giving them a broader set of products to work with. Ultimaco has a strong channel presence in Europe and the company is in the process of building its U.S. channel program, he said. In some cases, particularly among large systems integrators, the two share some of the same solution provider and service partners.

Separate from the acquisition bid, Sophos and Utimaco inked a reseller contract under which Sophos will carry Ultimaco's SafeGuard Enterprise software and the two companies agreed to mutually refer each other's products in sales situations. Norman said that agreement is designed to allow the two companies to take immediate advantage of any market opportunities while the acquisition is pending.