KEY POINTS:
New Zealand-based internet security business Endace has established a foothold in the United States by buying Applied Watch Technologies, a managed security services provider, for US$5 million ($6.6 million).
Endace provided Applied Watch - based at Crystal Lake, Illinois - with US$500,000 in working capital, and will issue an initial cash consideration of US$3.9m upon the deal's completion.
Applied Watch lost US$112,000 last year, despite revenues of US$1.5m, and at September 30, it had net liabilities of US$376,000, according to Endace, which is listed on the AIM (alternative investment market) of the London Stock Exchange and valued at about 70 million pounds ($194m).
Stephen Gleave, vice-president of marketing at Endace, told SCMagazineUS.com today that the acquisition will help the company take advantage of an increase in corporate use of open-source products.
Applied Watch also provides centralised management tools for open-source security software.
Open-source security software - often available for free - have gained in popularity over the past decade, taking market share away from Microsoft and playing an increasingly important role in business computing.
"What we hope to achieve is securing open source, and having a centralised managed place for that software to run," said Mr Gleave.
Endace co-founders Professor Ian Graham, Selwyn Pellett and Neil Richardson have their main research laboratory at Hamilton, and provide technology that allows many of the world's intelligence agencies to monitor internet traffic for key words and sources that may alert them to terrorists.
Kelly Kavanagh, Gartner principal research analyst, told SCMagazineUS.com today that the acquisition signalled that Endace is trying to gain a foothold in the United States.
"It seems like a reasonable move. The price didn't seem outrageous, and the important thing for doing managed services is to have that local footprint - in the US, in this case," he said.
- NZPA
