CyberGuard Acquires Webwasher

CyberGuard acquires high-end content security vendor Webwasher for $40M in cash and shares, and up to an additional $10M

April 26, 2004

3 Min Read

FT. LAUDERDALE, Fla. -- CyberGuard Corporation (NASDAQ: CGFW), the technology leader in network security, today announced that it is acquiring German high-end content security vendor Webwasher AG. Under the terms of the agreement, which was signed yesterday, CyberGuard will pay $40 million in cash and CyberGuard shares and up to an additional $10 million on a contingent basis for all of the shares of Webwasher. Webwasher will operate as a wholly owned division of CyberGuard.

“Adding this fast-growing secure content management (SCM) company clearly shows that we are executing on our strategic vision of becoming a broad-based security company focused on delivering solutions aimed at Global 1000 companies and government customers around the world,” said Pat Clawson, chairman and chief executive officer of CyberGuard. “Webwasher is the number one Web filtering provider in Germany and holds 40 percent of the market in Central Europe. More than 30 Fortune 500 companies, including Motorola, Texas Instruments and Sprint, use their SCM solution. In addition to enhancing our security offering, this acquisition shows our commitment to growth and expansion in key world markets – the US, Germany and Japan.”

CyberGuard anticipates that the transaction will be accretive to earnings per share in the 12 months following closing. The purchase price will be paid $8 million in cash and the remainder in stock. An earn-out provision allows for up to an additional $10 million in stock subject to Webwasher achieving certain revenue and profit targets through CyberGuard’s fiscal year ending June 30, 2005. Webwasher achieved $7.7 million in revenues in 2003, more than doubling their revenues for the prior year, and continued to show strong revenue growth for the quarter ended March 31, 2004. Venture capital firms Siemens Venture Capital, Invision and TecVenture, who backed Webwasher as it built its business, are the primary sellers.

“We are creating a broad-spectrum security offering of enterprise-class, best-of-breed technologies. Webwasher has designed the world’s best content, spam, URL and e-mail filtering into a single, integrated solution,” stated Clawson. “The latest blended threats and worms like Bagle can only be stopped effectively by a combination of application firewall plus application layer content filtering. Together, our products comprise a very compelling joint offer.”

“We are very excited about this transaction,” stated Dr. Horst Joepen, chief executive officer of Webwasher. “We have made Webwasher a technology leader in the content security space and the leading European-based vendor. Joining forces with a leading US security partner that matches our positioning of focusing on customers who require the very highest level of security is a major step forward. The combination with CyberGuard, a true technology leader in firewalls and VPNs, enables us to serve our target markets, customers and channels worldwide on a much stronger financial basis. This transaction opens up incredible new opportunities and markets for the combined CyberGuard and Webwasher entity and its product suite.”

Joepen added that the two companies complement each other because they share a number of common traits. “Both our firms come from a large corporate background, having spun out of global engineering and technology leaders, Harris Corporation from the US and Siemens AG of Germany. These corporate parents laid the foundation for staying at the cutting edge of technology R&D and providing a highly discerning customer environment that gives us unique insights into the needs of high-end user organizations. There is a perfect fit between our teams as we work together going forward to even better satisfy our customers.”

CyberGuard Corp.

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