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Sophos to acquire mobile data protection company Utimaco

The independent mobile data protection market continues to shrink with Sophos' endpoint encryption acquisition.

UK-based antivirus vendor Sophos Plc. is acquiring Utimaco Safeware AG in a deal that if approved, would add endpoint encryption and mobile data protection to its product offerings.

"We've been waiting for more of these little encryption vendors to get snapped up."

Eric Maiwald, Vice President and Service Director, Burton Group

Sophos expects to pay about $340 million for the voluntary public takeover, which is expected to be final in October. Sophos said it will also buy the 25% stake of Utimaco's largest shareholder, Investment Technology Partners LLC.

Germany-based Utimaco sells SafeGuard endpoint data encryption and has an agreement to sell LeakProof data loss prevention (DLP) from Sophos competitor Trend Micro Inc.

Utimaco worked with IBM and Lenovo Inc. to integrate a fingerprint reader on laptops. Utimaco is one of the first vendors to move from strictly hardware encryption to more of an enterprise encryption suite, said Eric Maiwald, vice president and service director at Midvale, Utah-based Burton Group Inc. Maiwald said Utimaco doesn't have a major presence in the U.S.

The independent mobile data protection market is contracting rapidly. Check Point Software Technologies Ltd. bought Pointsec Mobile Technologies Inc. in 2006, and McAfee Inc. bought SafeBoot Corp. Remaining independent companies include Credant Technologies Inc., PGP Corp. and GuardianEdge Technologies Inc., which has an OEM deal with Symantec Corp.

Maiwald said he expects the market to continue to consolidate as larger vendors expand their suites with more robust endpoint encryption features.

"This goes hand in hand with what Check Point did with Pointsec," Maiwald said. "We've been waiting for more of these little encryption vendors to get snapped up."

The mobile data protection field has been hot as companies work to meet regulatory requirements and counter the impact of lost and stolen laptops, removable storage devices and other devices, such as PDAs and smartphones, which are increasingly likely to hold sensitive information.

"Companies of all sizes are looking to protect against both external and internal threats with one manageable solution," Steve Munford, COO of Sophos said in a statement. "Integrating endpoint protection, network access control and encryption provides us with a great platform for innovation as the market continues to focus on securing and controlling information."

The deal may benefit both companies, said Paul Roberts, a senior analyst with The 451 Group, in the research firm's blog. Roberts said Utimaco wanted to expand inorganically in the field of anti data leakage, while the next obvious step for Sophos is endpoint encryption.

"Sophos has made no secret that it sees data encryption as a key part of its future, as its enterprise customers look for help with problems like accidental data loss and insider threats," Roberts said. "From a technology standpoint, we think Sophos gets top-shelf key management technology and transparent-to-users encryption for devices throughout the enterprise, complimenting its endpoint threat detection and policy-based access control wares."

News Editor Robert Westervelt contributed to this story.

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