RSA Security Acquires PassMark Security

BEDFORD, Mass. — RSA Security Inc. (NASDAQ: RSAS) acquired PassMark Security, Inc. A privately held company based in Menlo Park, PassMark delivers software-based authentication.

RSA Security purchased PassMark for total consideration of $44.7 million, which consisted of $9.0 million in cash and the issuance of approximately 2.0 million shares of RSA Security common stock (based on the average of the prior 30 days' closing stock price as quoted by The NASDAQ Stock Market). For purposes of generally accepted accounting principles (GAAP), this transaction will be accounted for as a purchase, and the securities issued will be valued based on the average of the closing stock price on or around the closing date; as a result, for GAAP purposes, the merger consideration is currently estimated to be approximately $48.2 million.

In addition, RSA Security is setting aside $2.7 million to fund employee retention plans and termination costs. The company will also reserve approximately 80,000 shares of its common stock related to the assumption of PassMark's stock option plan.

RSA Security expects this transaction to add in the range of $4 million to $5 million in revenue over the remainder of 2006 and in the range of $10 million to $15 million in revenue in 2007. Additionally, the company anticipates that the acquisition will be mildly dilutive in the second and third quarters of 2006 and accretive beginning in the fourth quarter of 2006.

RSA Security is also acquiring PassMark's solutions that are currently protecting online users worldwide. These include: a two-factor authentication solution that authenticates each user to a Web site based on a password and specific positive device forensics - and, at the same time, authenticates the site to the user with visual images, offering both parties assurances that they are taking part in a legitimate transaction; and a voice-based biometric authentication system - that identifies wired and wireless phones in combination with biometric voiceprints - to authenticate remote users over the phone. RSA Security will continue to develop and support these products. In addition, the company will leverage these technologies to further enhance its RSA® Adaptive Authentication offering, which allows the dynamic tailoring of authentication methodologies according to specific user preferences and scenarios.

SpeechTek Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues