Secure Computing Acquires CipherTrust

Jul 14, 2006


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Secure Computing Corporation, which secures connections between people, applications and networks, has announced that it has signed a definitive agreement to acquire CipherTrust, Inc. CipherTrust, a privately-held company, provides layered security solutions designed to stop inbound messaging threats such as spam, viruses, intrusions, and phishing, and protects against outbound policy and compliance violations associated with sensitive data leakage.

Secure Computing is purchasing CipherTrust for total consideration of $273.6 million, which is comprised of $185 million in cash, 10 million shares of Secure Computing common stock, and a $10 million seller note that is subject to certain performance obligations. As a result of the transaction, CipherTrust shareholders will have an approximate 14% ownership position in Secure Computing.

Under the terms of the agreement, Secure Computing has obtained a commitment for a senior secured credit facility from Citigroup. The facility comprises a $115 million term loan and a $20 million revolving credit facility. The transaction is expected to close by September 8, 2006, subject to any necessary regulatory approvals and customary closing conditions.

Depending on the closing day of the transaction, Secure Computing expects CipherTrust to add approximately $15 million to $20 million in revenue in 2006, and approximately $80 million in revenue in 2007. The transaction is expected to be breakeven with respect to pro-forma earnings per share by mid-2007 and accretive to pro-forma earnings per share in the second half of 2007.

In conjunction with this transaction, Jay Chaudhry, CEO, chairman and founder of CipherTrust, will join Secure Computing's Board of Directors as Vice Chairman and serve as the company's Chief Strategy Officer and a member of the company's senior management team.

(www.ciphertrust.com; www.securecomputing.com)