HP Pays $1.5B for ArcSight Security Software Maker

Acquisition adds real-time event monitoring to security portfolio. Marks second security-related purchase in last month and fourth buy since Hurd’s departure.

September 14, 2010

D.H. Kass

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Hewlett-Packard Co. said that it will acquire ArcSight Inc., a Cupertino, CA-based maker of security and compliance management software, for $43.50 a share in cash, or $1.5 billion, the vendor’s second security-related acquisition in a month.

The companies said in a joint statement that they expect the deal to close by the end of the year.

At the close of trading on Monday, ArcSight’s shares were up some 25 percent, or $8.81 to $43.91, slightly above HP’s per share bid, for a market capitalization of $1.52 billion.

The transaction is HP’s fourth since the departure of Mark Hurd, its former chief executive. Earlier this month, HP outbid Dell Inc. for storage vendor 3PAR Inc. at $2.4 billion, just shortly after snagging Fortify Software Inc., a San Mateo, CA-based provider of application security products, and Stratavia Inc., a Denver, CO-headquartered a maker of database and application automation software, the latter two for undisclosed sums.

HP said that the ArcSight products, featuring solutions for markets such as energy, financial services, government, health care and education, will expand its existing security portfolio and enable it to offer customers proactive monitoring of real-time events, heightened risk assessment and faster response to threats.

“From a security perspective, the perimeter of today’s enterprise is porous, putting enormous pressure on clients’ risk and compliance systems,” said Bill Veghte, HP executive vice president, Software and Solutions.

Veghte, who joined HP in May after 19 years at Microsoft Corp., most recently as the business head of the Windows unit, said that the “combination of HP and ArcSight will provide clients with the ability to fortify their applications, proactively monitor events and respond to threats.”

Tom Reilly, ArcSight president and chief executive said that “HP’s acquisition of ArcSight will enable the creation of a new type of security solution, one that serves the modern enterprise.”

He said that “HP will be able to offer an integrated security platform that delivers broader visibility, deeper context and faster remediation of enterprise-wide security and risk-related events.”

For its first quarter fiscal 2011 ended July 31, 2010, ArcSight reported sales of $48.1 million and $3 million in net income, a 39 percent leap in revenue and a 200 percent spike in earnings from the similar period a year earlier.

ArcSight posted sales of $181.4 million and $28.4 million in earnings for its fiscal year ended April 30, 2010, a 33 percent jump in revenue and a 187 percent spike in income.

TAGS: security,HP,acquisition,hewlett-packard,ArcSight

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