Zenith Electronics Corp. announced Friday that it would acquire Inteq Inc. of Herndon in a transaction valued at roughly $20 million.
Inteq, a privately held company, is one of the leading producers of a classified computer security technology known as Tempest.
"Zenith believes that by integrating Inteq's operations, Zenith will be better able to serve the U.S. government," a Zenith spokesman said Friday. He added that Zenith also would be "better able to develop and participate more fully for other markets for Inteq's technology."
The 8-year-old company's technology focuses on preventing computers handling national security-related information from leaking. Because computers are electronic devices, they emit radio frequencies into the air while they calculate. National security specialists fear that foreign agents with the right electronic equipment could eavesdrop on computers to discern what they are doing. Consequently, the National Security Agency, the nation's largest intelligence organization, has a Tempest program to assure that contractors provide computer equipment that is appropriately shielded.
The technology of Tempest is highly classified, although a variety of shielding techniques -- such as placing the computer in a copper box and/or building conductive plastics into the machine to block emissions -- are fairly well known.
Tempest computers and peripherals are required in most national security installations and key defense contractors. The nearly $1 billion Tempest market has been growing at a steady 30 percent-a-year clip, according to several Tempest contractors.
With more than $20 million a year in revenue, Inteq is a leading Tempest "boutique." Zenith and Inteq currently have a contractual relationship: Inteq is now "Tempest-shielding" Zenith's personal computers. Last October, Zenith won a $100 million contract to provide Tempest-protected personal computers to the Air Force and Navy.
Zenith, with sales of $1.7 billion a year, is best known for its color television sets, but the Glenview, Ill.-based company also has a personal computer division that grossed $242 million in sales last year.
Zenith will purchase Inteq in exchange for 800,000 to 1 million shares of Zenith common stock, which closed Friday at $20 a share.