Sophos plans to acquire German data security company

Security vendor Sophos plans to acquire Utimaco, a German company specializing in software that aims to prevent sensitive data from escaping corporate networks, an increasing focus with the rise in data breaches.

The offer will be tendered in August, said Graham Cluley, Sophos' senior technology consultant. German financial regulations require Sophos to announce its intention to acquire Utimaco before an offer is formally presented. The deal must also be approved by the German financial regulator.

Under preliminary terms, Sophos would buy 75 percent of Utimaco's outstanding shares at euro 14.75 (US$23.17) for a total of euro 217 million. In a separate transaction, it would buy the remaining 25 percent from Investcorp Technology Partners, a private equity company with offices in the U.S., U.K. and Bahrain.

Utimaco's product portfolio includes its SafeGuard line, composed of more than a dozen products dealing with data security aspects such as managing cryptographic keys, e-mail encryption and safeguarding data on mobile devices.

It also sells software that enables mobile operators to provide data to law enforcement for terrorism cases or other criminal prosecutions. Utimaco calls it "Lawful interception management."

The deal is expected to be complete by October. At that time, Utimaco will become a business unit within Sophos focused on data security. Sophos plans to retain the "SafeGuard" branding.

Sophos and Utimaco have "practically no overlap" in products, said Peter Norman, Sophos' vice president of product management. Utimaco is an attractive acquisition given its solid engineering and increasing interest around data security products, he said.

Utimaco holds about a 20 percent share of the world market for its product category. Its main competitors are Safeboot, which McAfee acquired in November 2007, and Check Point, each of which have about a 20 percent share, Norman said.

It's anticipated that Utimaco's 310 employees will stay on board after the deal is complete, Norman said. "The key business driver is about boosting both companies revenues," Norman said.

Over the long term, Utimaco's technologies could be wrapped into other Sophos products, particularly around deployment, reporting and management infrastructures, Norman said. IT managers demand software that's easier to manage, he said.

Sophos, based in Abingdon, England, sells a variety of security software for the corporate market. It does not have a consumer offering.