EMC announces $2.1 billion RSA acquisition

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EMC announced Thursday that it will acquire the security juggernaut RSA Security for nearly $2.1 billion.

The storage management company is expected to complete the acquisition by the fourth quarter of 2006. If it passes through regulatory approvals, the deal will be the second in the last 18 months that has married a market leader in security with a leader in storage management. Last year, Symantec paid $13 billion for Veritas Software.

EMC executives believe that its arrangement to pick up RSA marks a new era in securely managing information throughout its lifecycle.

"Businesses can't secure what they don't manage, and when it comes to securing information, that means simply two things – managing the data and managing access to the data," said Joe Tucci, CEO of EMC. "Bringing RSA into the fold provides EMC with industry-leading identity and access management technologies and best-in-class encryption and key management software to help EMC deliver information lifecycle management securely."

Under the agreement, RSA will operate as EMC's Information Security Division, headquartered in Bedford, Mass. RSA CEO Art Coviello will become an executive vice president of EMC and president of the division.

Coviello said that the new pact between the companies will help to better serve the market through improved integration.

"Security must be an integral part of the information infrastructure, transparently allowing authorized users to easily get access to information," he said. "The combination of RSA's security technology coupled with EMC's information infrastructure and financial resources will accelerate the integration of security into the information infrastructure."

RSA had been very active acquiring companies in the months prior to the announcement of its own purchase.

Just two months ago, RSA acquired PassMark Security, a leader in online banking authentication solutions, for $44.7 million. RSA said at the time that it expected to earn an additional $4 to $5 million in revenue this year and up to $15 million more revenue in 2007 because of the acquisition.

PassMark may have been best known for its Two-Factor Two-Way solution that validates users through a password and the computer they use to log on, while also authenticating the banking site they are using.

In December of last year, RSA bought Cyota for $145 million - $136 million of which was in cash for the company's outstanding capital stock, $5.5 million to fund a three-year retention pool and at least $3.5 million for the assumption of all outstanding Cyota stock options.

RSA was expected to add $22 million to $25 million in annual revenue due to the purchase.

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