today announced its intent to acquire Utimaco Safeware AG (“Utimaco”), a global leader in data security solutions for enterprises, headquartered in Oberursel, near Frankfurt a.M., Germany. Sophos intends to launch a voluntary public takeover offer in cash for all outstanding Utimaco shares. Concurrently, Sophos has entered into an agreement with Investcorp Technology Partners, the largest shareholder of Utimaco, to acquire its 24.99% stake in Utimaco for cash and Sophos stock upon the takeover offer becoming unconditional.

This intended combination furthers Sophos’s Security and Control strategy – to lead in protecting information and computers from external threats and careless or malicious end-user behaviour – at a time when data loss has joined viruses as a key concern for IT professionals. Upon completion, Utimaco will become a new business unit within the Sophos group focused on data security, while retaining its well-established, SafeGuard product branding under the Sophos brand.

Highlights

1. Sophos intends to make a cash offer at €14.75 per Utimaco share and a total implied equity purchase price of €217 million
   The intended offer represents a premium of 92%, 76% and 61% on Utimaco’s latest closing price, the averages of the last 30 trading day and the last 90 trading day prices, respectively.¹
2. Sophos has signed an agreement with Investcorp Technology Partners for the acquisition of its 24.99% stake in Utimaco
3. The acceptance period is expected to start in August 2008
4. Sophos anticipates completing the offer in October 2008
5. Independent of the offer, Sophos has entered into a reseller contract with Utimaco to supply SafeGuard Enterprise worldwide

Utimaco enables organizations to safeguard against intentional or unintentional loss of sensitive or confidential data by providing a complete range of data security solutions for data at rest, data in motion and data in use, based around strong encryption and central security policy management. Industry analyst IDC forecasts the Information Protection and Control market to grow at CAGR 33.4% between 2006 and 2011.²

"Information security should be as commonplace as anti-virus protection - no longer a nice to have, but a must have. Companies of all sizes are looking to protect against both external and internal threats, with one manageable solution," said Steve Munford, CEO of Sophos. "Integrating endpoint protection, network access control and encryption provides us with a great platform for innovation as the market continues to focus on securing and controlling information."

Mr. Munford continues, "Utimaco has great engineering and their new SafeGuard Enterprise product perfectly addresses the need for sophisticated key management and modular architecture. There is a strong fit with both organizations excelling in engineering and customer service, and we will continue to prioritize investment in these areas."

After strategic discussions, and independently from the intended offer, Sophos and Utimaco have entered into a reseller contract regarding SafeGuard Enterprise and a mutual referral agreement for all products of both companies, in order to take advantage of market synergies quickly.

Customers of both companies can look forward to the benefits of the combined experience and expertise, leading to more comprehensive and manageable solutions from a strong IT security vendor. As a business unit within the Sophos group, Utimaco’s products will receive continued strong support, development and investment.

Offer details

Sophos intends to launch a takeover offer in cash for all outstanding Utimaco shares at the price of €14.75 per share. This price represents:

• A 92% premium on the latest closing price of €7.68
• A 76% premium on the average of the last 30 trading day price of €8.38
• A 61% premium on the average of the last 90 trading day price of €9.16
• A total implied equity purchase price of €217 million

Concurrently, Sophos has entered into an agreement with Investcorp Technology Partners, Utimaco’s largest shareholder, in which Investcorp Technology Partners has agreed not to tender its 24.99% stake in Utimaco during the offer period and has agreed to sell this stake for cash and Sophos stock upon the takeover offer becoming unconditional.

It is intended that the offer will be subject to an offer acceptance level of at least 50.5% of the issued share capital of Utimaco, as well as other customary conditions.

The transaction will be financed through Sophos’ existing cash, new debt facilities and equity. Sophos has secured fully committed financing from HSBC and RBS as well as TA Associates, a leading technology focused private equity firm and an existing Sophos shareholder. Deutsche Bank Securities Inc. is acting as financial advisor to Sophos in this transaction.

Timetable

In accordance with German takeover rules, Sophos has published a statutory announcement of a voluntary public takeover offer and intends to issue the offer document describing the details of the offer to Utimaco’s shareholders, following approval by the German regulator Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). Sophos anticipates completing the offer in October.

About Sophos

Sophos enables enterprises all over the world to secure and control the use of their IT infrastructure and information. Sophos's network access control, endpoint, web and email solutions simplify security to provide integrated defenses against malware, spyware, intrusions, unwanted applications, spam, policy abuse, data leakage and compliance drift. Sophos is headquartered in Boston, US and Oxford, UK. More information is available at www.sophos.com

Sophos recently announced results for the fiscal year ending 31st March, 2008 with billings of $213.9 million and free cashflow of $41.8 million, up 28% and 41% on the previous year respectively. Cash balance at 31st March 2008 stood at $139.3 million.

About Utimaco

Utimaco is a leading global provider of data security solutions, enabling mid- to large-size organizations to safeguard their data assets against intentional or accidental data loss, and to comply with privacy laws. Utimaco’s complete range of data security solutions provide full 360 degree data protection for data at rest, data in motion and data in use. Utimaco offers its customers comprehensive on-site support via a world-wide network of certified partners and subsidiaries.

Utimaco Safeware AG, with headquarters in Oberursel, near Frankfurt, Germany,

¹ Based on stock prices from XETRA

² IDC, Worldwide Information Protection and Control (IPC) 2007 2011 Forecast and Analysis: Securing the World's New Currency, (IDC #206750), May 2007

Information Source:    Sophos

Image courtesy of Sophos