Verizon to acquire Cybertrust

Analysts say Verizon's acquisition of Cybertrust could boost the telecom company's credibility among enterprise customers who are increasingly bothered by security challenges.

Updated with additional detail from a press conference Verizon and Cybertrust held at 11 a.m. ET.

Cybertrust has plenty of high-quality people and clients, so provided Verizon can hang on to both, this could prove to be a shrewd move.
Paul Stamp,
senior analystForrester Research Inc.
When TruSecure Corp., Betrusted Holdings Inc. and Ubizen merged nearly three years ago, heavyweight security vendor Cybertrust Inc. was born. Now, it appears Cybertrust will be absorbed into the operations of telecom giant Verizon.

Verizon Business Monday announced a definitive agreement to acquire the Herndon, Va.-based information security services provider for an undisclosed price. The deal, expected to close in 60 to 90 days, will make Verizon Business the largest managed information security services to large-business and government customers worldwide, Verizon Business President John Killian said in a statement.

"As the world continues to move to IP, this combination creates an essential engine for protecting our customers' operations end-to-end," he said. "It will also enable Verizon Business to accelerate its creation and deployment of world-class security solutions to meet our customers' increasing need for comprehensive security solutions that are available globally."

Mergers and acquisitions at a glance:
There have been many acquisitions and mergers between IT security vendors and other companies in the last two and a half years. Here is a look at some of them:

  • FEBRUARY 2007: EMC Corp. announces a definitive agreement to acquire data security firm Valyd Software.

  • JANUARY 2007: Symantec Corp. signs a definitive agreement to acquire IT management software vendor Altiris Inc. for approximately $830 million.
  • JANUARY 2007: Cisco Systems Inc. announces plans to buy Internet security gateway appliance vendor IronPort Systems for $830 million.
  • JANUARY 2007: Fortify Software Inc announces its acquisition of Secure Software Inc.
  • DECEMBER 2006: IBM announces plans to acquire Consul Risk Management Inc., whose software tracks employee behavior and unauthorized records access.
  • SEPTEMBER 2006: EMC Corp. announces its $175 million acquisition of security event management vendor Network Intelligence Corp.
  • AUGUST 2006: IBM announces the $1.3 billion acquisition of Internet Security Systems Inc. (ISS) to bolster its position in the managed security services market.
  • JULY 2006: Secure Computing Corp. announces its acquisition of messaging security firm CipherTrust Inc. for $273.6 million.
  • JUNE 2006: EMC Corp. announces plans to acquire RSA Security Inc. for just under $2.1 billion.
  • DECEMBER 2004: Symantec acquires Veritas Software, maker of data backup and storage programs, for more than $13 billion.
  • Cybertrust CEO John Becker said that the deal is a "tremendous opportunity to accelerate and further realize the vision of Cybertrust that started two and a half years ago."

    He said the combined company will be the market leader of information security solutions worldwide -- the first to offer network, security, and identity management services from a single vendor. "Our customers and partners will benefit from the resources, capital, and 150-country local presence of Verizon Business that will stand behind and enhance the Cybertrust services and offerings that they have already come to value," he said.

    Nancy Gofus, senior VP and chief marketing officer for Verizon Business, wouldn't discuss the cost of the acquisition during a conference call with reporters Monday, nor would she go into specifics on how jobs will be affected. But she did suggest that layoffs will not be part of the process.

    "Our strongest asset is our people and we have a track record of retaining our talent and attracting new talent," she said.

    She said it remains unclear what will become of the Cybertrust name, but that Verizon and Cybertrust will not exist as seperate entities. "The integration has begun, but there is no plan to keep them as separate operations," she said. "We want to combine the strength of both organizations, but we need every one of the employees from both sides to do this. We hope to sort this out in the next 60 to 90 days."

    Mike Rothman, president and principal analyst of Security Incite in Atlanta, said the move makes sense, given Verizon's effort to build deeper relationships with larger enterprises. Rothman, who once served as vice president of marketing at TruSecure, said the acquisition will give the telecom a bigger footprint in the security market, he added.

    "This is like the BT (British Telecom) acquisition of Counterpane, only this is a much bigger deal," Rothman said. Last year, BT Group acquired Counterpane Internet Security Inc., whose founder and CTO is security luminary Bruce Schneier.

    He said this continues the trend where large telecoms are acquiring security vendors to make their service offerings more attractive to large companies that are increasingly inundated with security challenges. He added that it'll be interesting to see if Cybertrust's best security minds will adapt to the culture of a telecom company or go elsewhere.

    Paul Stamp, a senior security analyst for Cambridge, Mass.-based Forrester Research Inc., agreed the acquisition will give Verizon a much greater global presence in the security space.

    "For a vendor, the big differentiators in the security space are the people who work for you and the other clients you've got," he said. "Cybertrust has plenty of high-quality people and clients, so provided Verizon can hang on to both, this could prove to be a shrewd move."

    This is the latest in a long string of mergers and acquisitions in the security market, including EMC's purchase of RSA Security, IBM's acquisition of Internet Security Systems Inc. (ISS) and Secure Computing Corp.'s acquisition of messaging security firm CipherTrust Inc.

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