Platinum Technology Inc got back into its stride yesterday, putting its hand in its pocket for security software specialist Memco Software Ltd in a stock deal valued at around $412m based on Wednesday night’s close. The Illinois-based application development and data management software company said it will exchange 0.836 common shares, worth about $26 each, for each share of Memco’s stock. In an official statement, the companies said the combined offerings of Platinum and Memco would provide an unparalleled solution for protecting enterprise networks, databases and systems across multiple platforms. Marty Leamy, SVP of Platinum’s systems management division said one of the driving forces behind the acquisition was Platinum’s desire to get its hands on Memco’s access control product, SeOS. Platinum has been selling the technology, under an OEM deal, for the last three years, but by purchasing Memco the two companies can work more closely on integrating SeOS – effectively secure file system layer – and future products, into Platinum’s flagship security product, ProVision. Tel-Aviv and Redwood City-based Memco Software president Eli Singer said the market is becoming more and more consolidated and users are demanding tighter integration. But at the same time, security is still a specialist market. For Memco, this deal is a chance to capitalize on both those trends. We’ll become the security arm that Platinum never had and at the same time offer tighter integration for customers. Singer said the acquisition came about because the two companies realized they were developing products in very similar spaces. Memco was concentrating on a new intrusion detection and prevention product while Platinum was working on a new risk assessment solution. Both products addressed the NT server and Unix space so we decided to get together and develop and all-in-one solution. Nobody else in the market offers that. Singer added that the deal would also eliminate the previous sales and marketing channel conflict, where both companies were effectively selling the same product into the same market space. And for Memco in particular, it meant that the company could broaden its sales reach. Singer said: Although we’ve grown rapidly, the majority of our revenues have come out of North America and we’ve never had the resources to grow internationally. This deal will launch us immediately into that channel. The boards of both companies have already approved the acquisition, which will be completed early in the first quarter of 1999. Singer said that the companies would begin work on product direction almost straight away. Memco’s 250 staff, divided equally between its Tel-Aviv and Redwood City, California offices, will remain in their locations and continue to develop software products for integration into Platinum’s product suites. Platinum’s shares fell $3.50, more than 11%, to close at $27.37 on Thursday while Memco’s shares fell $0.25 to close at $21.68.
