Don’t get excited. That is the news I was hoping to hear out of the leading software firewall vendor. But sadly, it is not to be. The actual head line is “Check Point to acquire an endpoint encryption vendor as part of a data protection strategy”. I guess I have said everything there is to say in past posts about decoupling host and network security. Trying to execute on a strategy that ties the two together has historically been doomed to failure. Aside from the technical issues there is what I believe an insurmountable business issue. Firewalls are purchased by the network guys in the enterprise, endpoint protection solutions are controlled by the AV guys. You need twice the sales force and twice the channel to execute on both. (And four times the sales cycle time).
But let’s talk about this deal. Protect Data is a publicly held company in Sweden, their PointSec product line has gained tremendous momentum in the last couple of years and they are on a run rate to do $70 million this year. Check Point’s tender offer is about 8X revenue. That is steep, but according to one of the analysts on the Check Point investor call this morning, Walter Pritchard of SG Cowan, the market has already traded ProtectData’s stock over the tender offer price. So, at least the market believes Check Point is not over valuing ProtectData.
As I define the data protection space: encryption+leak prevention+ device management, Check Point is getting two of these elements with one purchase. ProtectData just completed an acquisition of Reflex Magnetics, a device and port management solution.
Now Check Point will have to also acquire a leak prevention company to complete their data protection strategy. There are a couple of those based in Israel so I expect that to be announced fairly soon.
It is nice that Check Point has finally articulated their strategy. I may have a problem with that strategy but the acquisition of PointSec is the right first step to get into data protection. Check Point has announced their move in the mid game. Now let's watch as the chess pieces arrange themselves for the end game.