Security software giant Symantec is preparing to announce an acquisition of Vontu, one the largest remaining independent providers of data leakage prevention software, which is used to control the flow of sensitive information across corporate networks.
Multiple industry sources have confirmed to InfoWorld that Symantec will soon announce a buyout of Vontu, perhaps as early as next week, which will significantly further the trend of consolidation that has played-out in the red-hot DLP (data leakage prevention) space over the last year.
The deal also gives Symantec a foothold in the burgeoning DLP segment, also referred by some as the ILP (information leakage prevention) space.
The two companies already maintain an OEM business partnership, through which Symantec markets Vontu's DLP technologies to its customers.
Sources said that the proposed deal will have Symantec paying US$300-$350 million for privately-held Vontu, whose revenues are estimated at roughly $30 million per year by some industry analysts.
Symantec and Vontu representatives declined to comment on the reported acquisition.
DLP has become an increasingly popular sector in the larger IT security market as companies of all sizes look for methods to prevent malicious or unintentional distribution of sensitive data from their networks.
The technology has been pitched by its proponents as one of the few available tools for protecting against so-called "insider threats," through which companies fear the loss of data like customer records or closely-protected intellectual property at the hands of employees, business partners, or hidden malware infections.
Driven by a range of market forces, including compliance regulations and high-profile data exposure incidents, the niche has attracted the interest of nearly 40 different vendors seeking to cash in on growing demand among buyers, particularly large enterprises in highly-regulated industries, such as the financial services space.
Among the deals that have already occurred in the DLP market are WebSense's acquisitionof PortAuthority for $90 million in January, EMC's buyout of Tablus for an undisclosed amount of money in August, and Raytheon's acquisition of Oakley Netowrks for an undisclosed sum in September.
On Monday, McAfee, Symantec's closest rival, announced plans to acquire encryption and device access control specialist SafeBoot for $350 million. Industry watchers believe that McAfee made the deal to bolster its standing in the DLP market, which it originally entered via the acquisition of data leakage software maker Onigma, a far smaller vendor than Vontu, for $20 million in Oct. 2006.
Independent DLP vendors unsurprised by acquisition
Officials at other independent DLP vendors said that they were unsurprised to hear of the proposed acquisition by Symantec because the deal had been heavily rumored in the past and based on the company's existing partnership with Vontu.
Faizel Lakhani, vice president of marketing at DLP specialist Reconnex, said that the acquisition serves as proof of the growing value of the technologies and the difficulty of building the applications from scratch.
The executive said that the merger also shows that large security providers like Symantec see DLP as an opportunity to get a foot in the door to sell their other products into enterprise customers.
"It's a validation of what we are doing, and it illustrates how hard it is to create an effective DLP solution -- large companies like Symantec only make these sorts of deals when the cost of internal development is too high," Lakhani said. "The thing that these [larger security vendors] are realizing is that DLP is the tip of the sword right now that will cause customers to make other security purchases."
Lakhani contends that many customers are currently making their DLP acquisition plans before following with investments in other security tools, including data encryption systems. The executive said that Reconnex, rival independent Vericept, and Vontu have been competing closely on deals for the last year, especially as other vendors have been acquired.
Industry analysts said that the proposed deal makes sense for Symantec as the firm hadn't yet established a major presence in the DLP space. McAfee's acquisition of SafeBoot likely increased the pressure on Symantec to make a move quickly, said Nick Selby, analyst with The 451 Group.
"We believe that Symentec had been looking at Tablus earlier this year because the price of Vontu was perceived to be too high, but then EMC made its deal," said Selby. "This left Symantec with the choice of a handful of DLP targets of similar size and efficacy; what Vontu did well was aggressively sell itself and build the perception that it was a market leader."
While Symantec and Vontu had fared well as partners in terms of sales, the analyst said that the companies may have experienced some level of tension as they were also competitors in the security space.
Both enterprise customers and other DLP vendors should be pleased to see the merger if it goes through, the analyst said.
Customers who had been on the fence about buying into DLP would be encouraged to see a stable parent in the form of Symantec to protect their investments in the technologies, while smaller vendors will benefit from the combined marketing power of Symantec and McAfee as they push further into the market, he said.
"For Symantec, the ability to offer Vontu's technology adds serious value to their overall proposition at the gateway and the endpoint, where they have been facing increased pressure from other vendors including McAfee," Selby said. "This allows them to bring something to market that was already perceived as a leading technology and that has already proven to work well with their existing line of perimeter defense tools."
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