Israeli data security giant Check Point Software Technologies announced yesterday a step many have been waiting for - the purchase of Swedish data security company Protect Data for about $586 million in cash.

This is just the second acquisition in Check Point's history. Its first was Zone Labs, which it purchased in December 2003 for more than $200 million. It had also tried to buy the U.S. software security firm Sourcefire, but was blocked by American regulators.

	Advertisement

The Swedish company's solutions are designed to protect laptops, handheld computers and smart phones.

Check Point says the acquisition will help it achieve the next stage in its strategy: adding a new dimension of defense for enterprise data by protecting portable computing products outside of a business' main network.

During the first nine months of 2006, Protect Data generated 92 percent revenue growth to $52.4 million, and its profit soared 170 percent to $8.3 million.

Check Point does not expect to profit from the deal until 2008, but forecasts additional revenues of $90 million in 2007.

The deal values the Stockholm-based Protect Data at SEK 180 per share, or SEK 4.2 billion. Protect Data's shares closed at SEK 175.50 on Friday, which translates into a 39 percent premium for the company.

The hefty price tag for Protect Data is no problem for Check Point, which ended the third quarter with $1.61 billion in cash.

According to Swedish law, Check Point must make an offer to shareholders, and will require at least 90 percent approval to complete the sale. Therefore, Check Point does not view the deal as closed yet.

Check Point stock has risen 35 percent in the last four months, and the company now has a market value of $5.1 billion on the Nasdaq.

"This acquisition would be the first step in our strategy for expanding Check Point's unified security architecture into data security," Check Point CEO Gil Shwed said. "It would result in new market opportunities and provide additional security and value to our customers and partners.

"With businesses facing increasingly severe consequences from data breaches and a stricter regulatory environment, it is apparent that protection must extend beyond the infrastructure to the data itself," Shwed added.