EMC said it would buy RSA, with a $2.1bn asking price evidently driven up by at least one competing bid – rumored variously to be either Hewlett-Packard Co or Symantec Corp.
Analysts were not impressed by the steep price, five times revenue. Some said the deal was mainly about giving both firms’ sluggish recent performance a shot in the arm, rather than any obvious synergies. Similar charges were leveled at the Symantec-Veritas deal.
But RSA reckons the synergies are more clear here than they were with the earlier merger.
When you’re talking synergies, antivirus and storage is a difficult one, RSA’s senior vice president of marketing John Worrall said. But when you talk about encryption and storage and access control for data, the synergy is a heck of a lot more rational one.
RSA’s core technologies are cryptographic tools, two-factor authentication tokens and related software, and key management software. EMC is understood to be primarily interested in the cryptography and key management tools.
It’s a lot different to the synergies, thought of as weak by many, played up at the time of the Symantec-Veritas merger. That deal was more about bringing together messaging security and archiving, with regulatory compliance as a driver.
According to Worrall, baking RSA’s type of security into EMC’s storage products and its other software, such as the VMware suite, is something that is being asked for by customers.
When we talk to customers they don’t like idea of being added on, they like idea of being built in, he said. It can’t survive as a standalone bolt-on, customers won’t stand for it.
This acquisition started to take shape as EMC and RSA were in OEM talks, according to Worrall and EMC CEO Joe Tucci.
That’s how these discussions started out, initially when EMC approached us, it was ‘Let’s do a license, let’s do an OEM’, said Worrall. But EMC said ‘No, we want to own this technology’.
Tucci, in a conference call announcing the deal, said other would-be buyers sniffing around ruled out an OEM deal.
This is critical technology, he said. If you think that I’m the only one who saw that, you haven’t been listening. This was very competitive. There’s a limited number of places you can get this technology, and if we didn’t have it we’d be at a disadvantage.
The implication that the nameless rival bidder would not have licensed RSA technology to EMC raises the suggestion that RSA, under EMC’s roof, will alter its currently broad licensing strategy. Worrall tried to play down that suggestion.
Art Coviello will be running the information security division under the RSA brand after the deal closes, Worrall said. Decisions on what we do are independent of EMC… If we make changes to how we license it will be because it makes sense as a business, not because we’re a part of EMC.
As such, RSA will continue to pursue technologies that do not necessarily have any synergies with EMC’s existing products, Worrall said. It also seems likely that EMC will seek to plug a few more gaps in its lineup with smaller filler acquisitions.
