SafeNet wraps up nCipher with takeover price at 52% premium
US-based SafeNet Inc's all-cash £86m offer for Internet security firm nCipher seems all but wrapped up as it has secured acceptance from directors and institutions holding 52% of its shares.
Sad though it might be that another Silicon Fen success story is bought out, it's hard to refuse an offer that, at 300p per share, is at a premium of 52% to the share price before it was boosted by what might have been rumours of imminent activity forced nCipher's hand and required it to notify the stock market of the approach before a deal had been concluded.
Alex van Someren, nCipher CEO, said, "nCipher has built a strong business and this proposed merger with SafeNet will accelerate our growth as we leverage SafeNet's distribution channels, global footprint and comprehensive product portfolio.
"We believe that this merger will create a strong and successful presence in the IT security industry and is in the best interests of our shareholders, customers and employees. Accordingly, the Board is pleased to recommend this offer which recognizes the premium value of nCipher."
It ends a rollercoaster ride for nCipher. It was founded in 1996 by Mr van Someren, who is also a co-founder of embedded Cambridge-based Internet software firm ANT Limited, .and his brother Nicko, a Cambridge University Ph.D.
The company listed on AIM in October 2000, raising £85m and becoming a darling of the dotcom frenzy. Its share price reached a heady high of 425p just a month after listing at 275p. After the crash, its price plunged to an August 2002 low of 48p. Five months later, in January 2003, nCipher returned £65m to its shareholders. Since then, though, it has been in steady recovery mode, not withstanding a reorganisation to cut back costs in February 2004.
Its current market capitalisation of £85 million places nCipher towards the bottom of the CamTech Top 20 Index, which measures the collective performance of the share prices of the Cambridge Cluster's quoted companies.
Interestingly, in the US, SafeNet chose to emphasize that "nCipher's latest publicly reported net cash was approximately £39m". Left unsaid was the notion that it has effectively paid only £46m.
SafeNet said it considers nCipher to be an attractive opportunity to add expertise and capabilities, "reinforcing SafeNet’s leading position in the broad IT security market". The acquisition would also provide SafeNet with additional focus on key emerging market technologies and vertical market applications such as data protection, payments systems, enterprise key management and identity management.
"We greatly admire nCipher and the work that it has done in encryption technology," said Tony Caputo, CEO and Chairman, SafeNet Inc. "We believe strongly in its product lines and will look to provide those products wider distribution while also coupling them with other SafeNet technologies in unique bundled security solutions In addition, nCipher's management and employees are world class and will complement SafeNet's team."
SafeNet was founded over 20 years ago. It provides security using its encryption technologies to protect communications, intellectual property and digital identities, and offers a full spectrum of products including hardware, software, and chips. USB, Nokia, Fujitsu, Hitachi, ARM, Bank of America, NetGear, the US Departments of Defense and Homeland Security, Adobe, Samsung, Texas Instruments, the U.S. Internal Revenue Service are leading customers.
