Every major tech acquisition seems to trigger a fair amount of speculation that other companies will follow suit to maintain competitive position and capitalize on some trend. The Cisco Systems Inc. acquisition of SourceFire is no different, and it’s spawning much speculation over potential acquisition targets in the security market, including Fortinet Inc., Palo Alto Networks, Imperva and others.
Analysts are lining up to push the notion that companies that specialize in technologies that detect and thwart sophisticated hacks and threats are prime for acquisition. They’re all reading the tea leaves that enterprises are increasingly willing to spend on tech that will protect their data and digital infrastructure. And they’re right, which is why Cisco paid $2.7 billion or 12-times annual revenue for SourceFire, an intrusion prevention specialist.
The expectation is other high-profile security specialists will now become prime targets for larger vendors who need to either repair or fill out their data protection portfolios.
Palo Alto Networks tops the list. The next-generation firewall pioneer stunned the market with its stellar IPO in 2012. Since then, the stock price has moderated, but remains high. Palo Alto Networks is a strong company with market-leading technology. Partners say Palo Alto Networks’ channel engagement is superior to compared to other vendors. While acquiring Palo Alto Networks would cost as much as $3 billion, it would be a crown jewel any of the large vendors. There are rumors that Symantec is sniffing around Palo Alto Networks.
Fortinet, market leader in unified threat management appliances, is a frequent mention in the acquisition rumor mill. The company commands the UTM marketplace, and would cost a pretty penny to buy. In the past, it was thought Cisco was interested in buying Fortinet, but nothing came to pass. Its UTM appliances would fit nicely in a networking or infrastructure management vendor.
The other UTM and firewall vendor that could garner potential interest is Watchguard Technologies. There are rumors out in market that some larger security vendors are looking to snap up Watchguard to expand their market share and augment their hardware product portfolios.
Imperva is rising to the top of the list of Web gate security vendors that could get acquired. As more resources are pushed to the cloud, gateway security is transforming to extend protection to data and apps wherever they reside. This is making Imperva and companies like it attractive as potential takeover targets. In the same class as Imperva is Blue Coat, Websense and Zscaler. All four of these companies would augment the security muscle of any of the large IT vendors.
Just who would buy any of these companies? It’s mostly the usual suspects: Hewlett-Packard, IBM, Cisco, Dell and Juniper Networks. Over the years, all of these tier-1 vendors have bought into the security market, but none have truly emerged as a security leader. While these are the obvious buyers, others such as Microsoft, Symantec, McAfee and EMC cannot be discounted. All are looking at ways to expand their portfolios and accelerate revenue.
While a lot of hype is following the Cisco-SourceFire deal, it’s best to keep things in perspective. Big acquisitions often spark speculation. The one thing that the Cisco-SourceFire deal proved is security remains a constant hot segment for capitalization.
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