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Rumors that ArcSight is putting itself up for sale for $1.5 billion has understandably triggered speculation about possible suitors.
The rumors were reported this week in the Wall Street Journal. Officially, ArcSight has no comment, but given its footprint in the security information management space, any such deal is sure to ripple through the market.
According to the Wall Street Journal, the company has been “quietly” shopping itself to Oracle, Hewlett-Packard, EMC, IBM and CA. To industry analysts, some of those companies make more sense than others.
“It’s been long rumored that HP was interested in snagging ArcSight, but they are fairly ensconced with rival enterprise security information management [ESIM] vendor SenSage and even have an OEM agreement with them,” said Andrew Hay, an analyst with The 451 Group. “Bringing ArcSight into the mix might threaten the SenSage OEM arrangement from an ESIM perspective, but the partnership may work out if both technologies could somehow be forced to play nicely with one another.
“If Oracle wants to buy outside of their traditional sector, it’d likely be a similar acquisition to that of Intel/McAfee, where Oracle would allow ArcSight to operate as an independent revenue generating organization,” he continued. “Cisco is also rumored to be interested if only to take a second crack at the ESIM sector. Having let MARS [Monitoring, Analysis and Response System] die a slow and painful death, Cisco could likely benefit from an acquisition like ArcSight as it would fit nicely into their current portfolio, provided they didn’t make the same mistakes they did with MARS.”
McAfee would also be a logical fit, though the proposed deal with Intel could impact such an acquisition, opined Mike Rothman, an analyst with Securosis.
“Their ability to do a $1.5 billion deal, kind of undergoing their own kind of M&A, is obviously impacted,” he said. “Does that mean it can’t happen? No.”
To make an acquisition of ArcSight really work, whoever bought the company would need a strong professional services business, making Hewlett-Packard and IBM logical suitors as well, he added.
As for the rest of the market, opinions were divided as to whether the acquisition of ArcSight would be good or bad.
“I suspect that ArcSight’s competitors would love to see them acquired,” Forrester Research analyst John Kindervag told eWEEK. “ArcSight has the best brand recognition in the market and is a formidable competitor in deals. The chances of a successful post-acquisition integration are pretty slim once the blush of the purchase wears off. That could marginalize ArcSight and open up the competitive landscape.”
On the other hand, buying ArcSight would put a substantial share of the security information and event management (SIEM) market in the hands of the acquirer, and likely become a centerpiece of the buyer’s security strategy, argued Scott Crawford, an analyst with Enterprise Management Associates.
“This is the strategic appeal of ArcSight as an acquisition target: Its established leadership and the role of SIEM … would combine to make it a valuable portfolio asset-and therefore an attractive acquisition target,” he said.