CyberGuard Unable To Pull Trigger On Bid For Secure Computing

The unsolicited offer, a one-for-one stock swap that Secure Computing quickly rejected, sat on the table for more than three weeks, even after CyberGuard publicly announced it would up the ante by paying some of the $297 million in cash.

A representative at San Jose, Calif.-based Secure Computing, though, said CyberGuard never formally contacted his company to engage in further negotiations after the initial rejection.

In the end, the idle bid caused too much anxiety among CyberGuard shareholders, said Pat Clawson, chairman and CEO of the Fort Lauderdale, Fla.-based network security vendor. "We wanted to give our investors a sense of confidence that we were not going to run out and do a deal at any moment, with the market as undecided as it is right now," he said.

CyberGuard saw the acquisition move as a way to strengthen itself against Cisco Systems and Check Point Software Technologies, its top firewall/VPN market rivals, said Clawson, who didn't rule out another bid for Secure Computing in the future.

Yet the day the original offer was announced, some solution providers at a CyberGuard partner conference in Fort Lauderdale voiced concern about the wisdom of acquiring Secure Computing, since CyberGuard still hadn't finished integrating its earlier acquisitions of security vendors Webwasher and Snap Gear.

"There was an enormous amount of confusion expressed by the partners at that event," said one CyberGuard partner, who requested anonymity. "Partners were concerned about the perceived overlap in the product line and the different brand names still lingering."

Clawson said he recognized that CyberGuard needed to streamline its product set into a single brand and, to that end, the company named Bryan Bain as vice president of worldwide marketing. "We hired Bryan to bring everything under the CyberGuard brand," he said.

Solution providers said they'll be looking for CyberGuard to get a better grip on its acquisitions. "It's not so much product confusion for me. It's just about catching up," said Kris Zupan, CEO of E-DMZ, Wilmington, Del. "Right now, with Snap Gear, we are up to speed But as far as Webwasher, we are still going through the service definition on it and may offer it in about a month."