Baltimore network security company SafeNet Inc. has agreed to purchase Cylink Corp. of Santa Clara, Calif., in an all-stock deal valued yesterday at $30.9 million.
The acquisition should boost SafeNet's business with government customers, chief executive Anthony A. Caputo said.
"The government market in particular is of great interest to us today, and we think this acquisition will help us provide more services to our government customers," Caputo said.
SafeNet develops technology for network security and sells systems to network equipment makers and directly to corporate customers.
Cylink sells hardware and software systems to corporate and government customers.
"We have some overlap between our products, but quite frankly in the end they fit together kind of nicely," said Cylink chief executive William P. Crowell, who will join SafeNet as adviser to Caputo.
Under terms of the deal, SafeNet will issue 0.05 shares of its stock for each share of Cylink stock, or about 1.839 million shares.
At SafeNet's closing price Wednesday, before the acquisition was announced, the deal was valued at $35.4 million. SafeNet stock closed yesterday at $16.79 a share. Cylink's stock price doubled to 78 cents a share.
"I think this is a great price," said Michael Tieu of SWS Securities Inc. in Dallas.
SafeNet will also get about $8 million in Cylink cash after the deal, Tieu said, and will double its revenue in 2003.
"I think all and all it's a very positive pickup for SafeNet," he said.
SafeNet has about 135 employees, most in Baltimore. Cylink has about 175 employees in Santa Clara and a research facility in Raleigh, N.C. The combined company have 225 employees, Caputo said. Most of the jobs to be eliminated at Cylink's West Coast manufacturing facility.
This month, SafeNet reported third-quarter profit of $993,000 (12 cents per share) on revenue of $8.8 million.
Cylink lost $7.9 million (24 cents) on revenue of $7.1 million in the third quarter.