By Joris Evers
Staff Writer, CNET News.com
June 29, 2006
update: Data storage specialist EMC has agreed to acquire digital
security company RSA Security for slightly less than $2.1 billion.
EMC will pay $28 in cash for each share of RSA and the assumption of
outstanding options, the Hopkinton, Mass., company said Thursday in a
statement. That brings the aggregate purchase price to just under $2.1
billion, net of RSA's existing cash balance, it said.
With the takeover, EMC said, it will create a company that can help
organizations securely manage their information. EMC is a large
provider of data storage products, while RSA sells identity and access
management technologies, such as its SecurID tokens, as well as
encryption and key management software.
"EMC is where information lives and tomorrow EMC will be the company
where information lives securely," Joe Tucci, chief executive of the
data storage maker, said on a conference call.
During the conference call, Tucci faced heat from financial analysts
who questioned the relatively high price paid for RSA and the reasons
for acquiring the company.
"This company and this space are incredibly hot," Tucci said in
response to the critique. "This was critical technology. I am telling
you this was very competitive. Not having it would have put us at a
severe disadvantage, and others that might have bought it would not
have wanted to share it with us."
To grow its business, EMC needs to integrate data storage and
security, Tucci said. "That is mandatory and if you don't do it right,
you fall off. The whole name of the game here is how you build
continued value for the long shot."
The announcement of the deal came after RSA Security earlier on
Thursday issued a statement saying that it was in negotiations with
unnamed parties on a potential strategic deal. That statement followed
a New York Times report that said EMC was close to buying the digital
security company. RSA put itself up for auction several months ago,
the newspaper said.
The acquisition is expected to be completed late in the third quarter
or early in the fourth quarter of 2006, subject to customary closing
conditions and regulatory approvals, EMC said. Upon completion of the
deal, RSA will operate as EMC's Information Security Division,
headquartered in Bedford, Mass.
Art Coviello, RSA's current president and CEO, will become an
executive vice president of EMC and president of the division.
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