Secure Computing Snubs CyberGuard Offer

"Secure Computing's board believes that the proposal is not in the best interests of its stockholders," Secure Computing, San Jose, Calif., explained in a statement.

CyberGuard Chairman and CEO Pat Clawson said his company remains determined to buy Secure Computing because the deal was good for the stock holders of both companies. He said CyberGuard would now seek to sweeten the offer by raising some or all of the $297 million bid in cash.

Clawson told CRN Wednesday that Secure Computing is a duplicate of CyberGuard, a comparison that in practice effectively dilutes the two companies' abilities to take on the bigger players in the firewall and VPN markets.

"We have duplicate development expenses, duplicate marketing expenses, duplicate missions," said Clawson. "Together, we'll be much more well positioned to fight Check Point [Software Technologies] and Cisco [Systems]."

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CyberGuard made its bid of $297 million on July 11. Had the offer been accepted, $14 million worth of excess resources resulting from the blending of the two network security companies would have been reduced, Clawson said. "There's a big trim there," he said.

A source close to the negotiations said CyberGuard is positioned "to not take no for an answer" to its offer to acquire Secure Computing.

Clawson disagreed with reports that the bid was hostile. "A hostile bid is when you start buying the company's stock. This is clearly just an unsolicited proposal to acquire the company."

Tony Pitman, executive vice president of South Seas Solutions, a VAR and CyberGuard partner in Denver, Colo., said he believed the bid by CyberGuard represents only the tip of the iceberg when it comes to long overdue consolidation in the network security industry. "It's too small a market with too many players," said Pitman. "The quicker everyone starts consolidating, the quicker today's smaller guys will be able to compete against the big enterprise vendors. If not, Cisco could buy CyberGuard. You'll have Goliath buying David."