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Vista Equity is selling Websense to Raytheon for $1.9 billion, and entering a JV for a 19.7% stake (via Raytheon & Websense)


It seems that cybersecurity will continue to be the new market trending as cyperattacks are up 50% in 2014, compared to 2013. As we hurdle towards the middle of 2015, companies are growing increasingly concerned about keeping their enterprise safe and not becoming another cybersecurity statistic in 2015. A recent post this week detailed the huge success that IT security firms had in obtaining VC and IPO investment mid-April. Now, a giant in the security industry, Raytheon, has announced that they are going to purchase Websense for $1.9 billion. Raytheon specializes in defence and security, securing sales of $23 billion in 2014. Most of Raytheon’s sales are generated from contracts with the government, providing the national security and defence measures. Now Raytheon intends to enter the market for enterprise security by offering companies, what they call, “advanced, defense-grade” security.

 

After acquiring Websense from the private equity firm, Vista Equity, that owns it, Vista Equity will enter a joint venture (JV) with Raytheon. Vista Equity intends to invest $335 million to have a 19.7% stake in Websense. The new JV with Raytheon and Vista Equity intends to update their existing Websense Triton to offer enterprises government level security that will deter cyberattacks in the immanent future.

 

With Raytheon leading this new Websense software, I feel sorry for the growing competitors vying for contracts with enterprises because they probably don’t have the amount of capital and intellectual property backing them. Raytheon intends to make some of their patents available to Websense within the JV to create the same level of security that they deliver to their government clients. While the billion dollar backing and national defence level security will make them stiff competition in the race to become the next best enterprise security company, I am actually happy that this is happening. So long as companies start employing the highest levels of cybersecurity possible, I will sleep a little bit easier.

 

However, it isn’t just private companies that are entering the race for greater cybersecurity, the government is starting new cybersecurity initiative to stop cyberattacks. Our recent post gives more details on this new cybersecurity initiative, led by Michael Daniel, the special assistant to the President. A new Executive Order was created to give the cabinet members the power issue a sanction against entities engaging in cybercrime. However, how they will implement this is unknown.

 

Lisa Monaco, the president's assistant for homeland security and counterterrorism, recently released a statement with ideas for stopping and preventing malicious cyberattacks. She stresses the need for companies to increase the necessary costs for launching and attack, and to decrease the economic benefits. In this way, Monaco is essentially utilizing basic economics to hit cyber criminals in their pocket books. How this will be implemented is uncertain, but I’m sure that developments in cybersecurity will be plentiful with the amount of capital and competition currently in this market.

 

The acquisition of Websense is expected to occur in the second quarter, and the JV should occur shortly thereafter. If all goes according to plan, Raytheon may release an enterprise security product before the end of the fourth quarter.

 

C

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