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In a suprising move designed to solidify its position in the lucrative identity management market, Computer Associates International Inc. on Wednesday agreed to acquire Netegrity Inc. for $430 million in cash.
Netegrity is one of a handful of ID management vendors that have been competing against the larger players in the market, such as Novell Inc., RSA Security Inc., Sun Microsystems Inc. and IBM.
Netegrity is best known for its SiteMinder Web single sign-on product and IdentityMinder ID management platform. The company, based in Waltham, Mass., has been looking for a buyer for some time, and in CA it seems to have found a white knight. Netegritys stock price had fallen by more than 50 percent since November 2003 to about $6 last month, although it has come back a bit lately.
CA executives said that the acquisition will give the company the ability to compete better in the ID management market. CAs current ID management and access control offerings center mainly on its eTrust Directory product and provisioning solutions.
“By acquiring Netegrity we will make our identity and access management suite stronger and deeper,” said Russ Artzt, executive vice president and head of the eTrust Security business at CA, based in Islandia, N.Y. “The acquisition effectively rounds out our [identity and access management] business.”
This is the second purchase in the last two months for CA, which also acquired anti-spyware provider PestPatrol Inc. in August. However, CA was not alone in its interest in Netegrity. Officials at both companies said there were several other suitors involved in the process.
CA, which has a reputation for building its portfolio through acquisitions, paid a premium for Netegrity. The smaller company had $47 million in revenue in the first half of 2004. But CA executives believe that they can achieve significant cost savings and efficiencies through the acquisition and will also be able to market Netegritys products more aggressively and widely than Netegrity was able to do on its own.
CA hopes to find $15 million to $20 million in cost savings annually through some facility consolidations, elimination of redundant back-office personnel and combination of the companies development organizations.
“Whats beautiful about this acquisition is that our solutions complement each other so well,” Artzt said. “Were really very synergistic in our ability to secure the user and secure the enterprise. It will be relatively straightforward to do the things we want in terms of integration.”
Netegrity already integrates some of its products with CAs directory offering, and Artzt and Barry Bycoff, Netegritys CEO, said they anticipate no problems in integrating the two companies solutions.
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