Competitors Accuvant and FishNet Security have agreed to join forces, creating a roughly $1.5 billion information security giant with solutions covering nearly every aspect of cyberdefense.
The new company will be owned primarily by the Blackstone Group, a private equity firm that acquired a majority stake of Accuvant in March. Blackstone said at the time that it was looking to build out its technology portfolio, and felt Accuvant could "become the dominant player" in the security integration business.
Accuvant CEO Dan Burns will lead the combined company once the deal closes, which is expected to happen in the first quarter of 2015. Rich Fennessy, who replaced FishNet Founder Gary Fish as CEO in November 2013, will stay on as an adviser during the integration process, according to a statement from the companies.
[Related: Accuvant Acquired By Private Equity Firm]
"The leadership of both companies realized that we had been trying to solve many of the same problems for our customers, but in slightly different ways," Burns said in a statement.
The combined company's name, marketing brand and corporate headquarters locations are expected to be determined during the integration process. Accuvant, No. 48 on the CRN SP500, is based in Denver, while FishNet, No. 46 on the CRN SP500, has its headquarters in Overland Park, Kan.
Minority owners in the new company include Investcorp, an international investment firm that acquired a majority stake of FishNet in January 2013, and Sverica International, a longtime Accuvant shareholder. Financial terms of the transaction are not being disclosed.
The new company should have more scale, deeper resources and richer supplier relationships to serve customers faced by increasingly severe and sophisticated cybersecurity attacks.
"The demand is outstripping supply in terms of technical capabilities," Dan Wilson, Accuvant's executive vice president of partner solutions, told CRN in an interview.
The two companies had been considering coming together for a few years, Wilson said, but lacked the capital needed to pull the trigger until Blackstone came along. The two solution providers hammered out the details over the past couple of months, he said.
"Despite being competitive, there has always been a strong relationship [between Accuvant and FishNet] with mutual respect for each other's business," Wilson said.
Both companies have enjoyed enormous growth in recent years, with FishNet nearly tripling in size between 2009 and 2013 and Accuvant realizing an average compound growth rate of nearly 32 percent per year over that period.
Managed services has been a particularly robust area for both companies, with FishNet growing its practice by more than 500 percent in 2013. Wilson said the combined company is committed to continue growing its managed services practice.
The new company will employ more than 1,400 people, 650 of whom will work as either consultants or engineers. The impact of the deal on the workforce has yet to be determined, Wilson said.
The combined solution provider will have 60 offices across the United States and Canada. FishNet also has an office in London.
The new company will continue to look for opportunities to expand its footprint both in North America and abroad, according to a list of frequently asked questions about the deal.
Despite the new company's size, Wilson estimates its business will take up just 3 percent of the $60 billion to $70 billion security market, meaning the combined entity still has a lot of room to grow.
"Our eyes are certainly open to the possibility [of additional mergers and acquisitions]," he said.
PUBLISHED NOV. 6, 2014