Cyber Security Firm Impreva Seeks Investment Bank to Explore Options

Hedge fund group fears its shares of Imperva are undervalued and might have sale in mind, sources say.

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REUTERS - U.S. cyber security company Imperva, which was founded and originally led by Israeli Shlomo Kramer, is seeking to hire an investment bank to help it explore strategic options after coming under pressure from activist hedge fund Elliott Management Corporation, according to undisclosed sources familiar with the matter.

The move comes after Elliott unveiled a nearly 10 percent stake in Imperva last month and argued its shares are undervalued. Elliott said in a regulatory filing it was speaking to the company about "strategic and operational opportunities."

Imperva could appoint a financial adviser as early as next week after interviewing investment banks in recent days, undisclosed sources said on Friday. This adviser will help the company review its options, including a potential sale, and help it deal with Elliott, sources say.

The sources asked not to be identified because the deliberations are confidential. Imperva, which has a market capitalization of $1.44 billion, and Elliott both declined to comment.

Based in Redwood Shores, California, Imperva offers cyber security solutions to protect critical data of businesses. It taps into a shift away from perimeter defenses such as firewalls to secure data and web applications by detecting and preventing attacks before they reach inside an organization.

Imperva competes with IBM Corp, F5 Networks and Akamai Technologies. It was founded in 2002 by Kramer, who co-founded network security firm Check Point Software Technologies, and two other Israelis. Kramer owned about a tenth of Imperva as of December 31.

The company, which has research bases in Israel and Texas, has struggled this year with slowing growth in its web application firewall business and problems with its sales operations in Europe, where it had to replace a top executive. Its shares are down 29 percent year-to-date, while the S&P 500 Index is up 4 percent.

Imperva could become the latest company to join the wave of consolidation in the cyber security sector. Last month, technology security firm Symantec Corp said it would buy cyber security company Blue Coat Systems Inc from buyout firm Bain Capital LLC for $4.65 billion to ramp up its enterprise security business.

A Morningstar research note said Imperva's position in markets for protecting web applications and databases "could be of strategic value to other security providers."

Imperva is the latest addition to a long list of enterprise technology companies that Elliott has pushed to explore a sale.

Business software company Qlik Technologies Inc agreed to be acquired by private equity firm Thoma Bravo LLC last month for $3 billion after pressure from Elliott.