CyberGuard Rival Rejects Bid

"Secure Computing's board believes that the proposal is not in the best interests of its stockholders," the San Jose, Calif.-based company said in a July 15 statement, four days after the initial bid was made.

Pat Clawson, chairman and CEO of Fort Lauderdale, Fla.-based CyberGuard, said his company remains determined to buy Secure Computing because the deal is good for the stockholders of both companies. He said CyberGuard will now seek to sweeten the offer by raising some or all of the $297 million bid in cash.

Clawson told CRN that Secure Computing and CyberGuard have many complementary strengths, and remaining independent dilutes each company's ability to take on the bigger players in the firewall and VPN markets.

"We have duplicate development expenses, duplicate marketing expenses, duplicate missions," said Clawson. "Together we'll be much more well-positioned to fight Check Point [Software Technologies] and Cisco [Systems]."

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If the offer is accepted, $14 million worth of excess resources resulting from the blending of the two network security companies will be reduced, Clawson said. "There's a big trim there," he said.

Tony Pitman, executive vice president of South Seas Solutions, a VAR and CyberGuard partner in Denver, said he believes the bid by CyberGuard represents only the tip of the iceberg when it comes to long-overdue consolidation in the network security industry.

"It's too small a market with too many players," Pitman said. "The quicker everyone starts consolidating, the quicker today's smaller guys will be able to compete against the big enterprise vendors. If not, Cisco could buy CyberGuard. You'll have Goliath buying David."