US snaps up Marshal Software for $45m

By RICHARD WOOD

Auckland-based email security firm Marshal Software is being sold for US$23 million ($45.8 million) to Nasdaq-listed American firm NetIQ. The cash deal closes on December 31.

In discussing the sale, Marshal Software general manager John Skeates took a serve at local and foreign venture capital firms. He said they missed the opportunity to get involved when Marshal went to the market two years ago.

"It wasn't met with a flood of interest."

Skeates said over the past six months Marshal had been approached weekly by firms wanting to discuss a variety of agreements from capital to purchase.

The major shareholders and directors of Marshal, and therefore beneficiaries of the deal, are founders Sean Dick, Martin Oxley, Kevin McFall, Peter Hodges and Alan Wilkinson. Skeates joined two years ago and is also a director with a smaller stake, and there are other minor shareholdings.

Dick will leave the post of managing director to focus on Marshal's former parent firm, Designer Technology. Wilkinson, who was on the board and not involved in day to day operations, is also leaving. Skeates remains general manager, reporting to a US senior vice-president of NetIQ, Tom Kemp, who was in New Zealand yesterday.

California-based NetIQ said the acquisition would allow it to help email administrators to control spam (junk mail sent over the internet) and monitor electronic data entering and leaving a system.

NetIQ sells migration, security administration, and performance management software products for electronic messaging.

Skeates said the sale was necessary to give Marshal's software products MailMarshal and WebMarshal a crack at becoming market leaders.

Marshal claims 2 per cent to 3 per cent of the market; competitors with 20 per cent to 30 per cent.

"We believed Marshal could be a major player as the content security market matured and we wanted to be one of the players left standing.

"We want to be a global brand and around in the long term."

NetIQ's Kemp said Marshal was in a hot niche in the software market. Research showed 40 per cent of email received by corporates was spam - and the companies needed software to control it.

"It is a huge point of pain for IT staff and personnel."

Skeates said NetIQ has a commitment to a New Zealand facility and the 57 staff will be retained.

The staff will receive additional benefits on top of existing terms as the firm "bends over backwards to look after them".

Skeates said the deal would help both Marshal and New Zealand attract more top developers.

The sale to NetIQ raises the question of whether selling out to US firms is the inevitable result of success in New Zealand.

Eighteen months ago, Prime Minister Helen Clark said Marshal was the type of company the Government wanted to encourage.

Marshal was one of the fastest growing firms in New Zealand with 870 per cent growth in two years. It also reached the top 20 in the Deloitte Asia/Pacific Fast 500 with a final result due soon.

Marshal was reported in November as turning over $12 million for the past 12 months.

NetIQ expects the firm to contribute US$2 million a quarter to its quarterly turnover of US$77 million. Skeates said the route taken by Marshal was pioneered by Symantec's US$27.5 million purchase of Auckland-based Binary Research's Ghost software and development team in 1998.