Proofpoint acquires insider threat intelligence firm ObserveIT in $225 million deal

Proofpoint hopes to strengthen its enterprise security offerings through the buyout.

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Proofpoint has acquired threat management provider ObserveIT in a deal aimed at bolstering the firm's enterprise cybersecurity portfolio. 

On Saturday, the Sunnyvale, Calif.-based company said the purchase has been made for $225 million in an all-cash agreement. 

Founded in 2006, ObserveIT specializes in endpoint security and insider threat detection. 

Catering for 1,900 customers in 87 countries, ObserveIT provides solutions for real-time enterprise network management, alerts when suspicious behavior is detected, and also assists firms in cybersecurity-related legal compliance.

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Boston, Mass.-based ObserveIT has raised $53 million to date. Previous investors include Bain Capital Partners. 

Proofpoint will harness ObserveIT technology to improve its data loss prevention (DLP) capabilities. Specifically, the firm's endpoint and data risk analytics solutions will be joined with existing Proofpoint information classification, threat detection, and intelligence offerings. 

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The improved Proofpoint information protection suite will be made available to enterprise clients during 2020. In addition, the company intends to invest in ObserveIT's insider threat management solution. 

"Today's ObserveIT acquisition underscores Proofpoint's commitment to providing organizations with people-centric cybersecurity and compliance solutions that protect what matters: their people and the data they have access to, in a post-perimeter, cloud-first world," said Gary Steele, CEO of Proofpoint. "Defending data requires the ability to detect risky insider threat behavior and risky user activity, and swiftly mitigate risk across cloud apps, email, and endpoints. With ObserveIT, we will bring to market the first truly innovative enterprise DLP offering in years."
 
Proofpoint says that one major change to ObserveIT's business model -- a move from licensing to a subscription framework at the point the deal changes -- will likely be "nominally accretive" for Q4 2019, and "nominally dilutive" in respect of non-GAAP results over the same period. 

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In a blog post, Mike McKee, CEO of ObserveIT, said the deal "represents a major development in the ObserveIT story, and I am thrilled to be hitching our wagon to such a forward-looking security leader."

"I look forward personally to joining the Proofpoint team, and I am highly confident in our collective ability to make this a seamless transition and to very quickly deliver the benefits of this partnership to all," McKee added.

The transaction is expected to close in Q4 2019, subject to regulatory approval. 

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