Raytheon's big Websense bet: Defense grade security will woo enterprises

Raytheon acquired Websense for $1.9 billion and formed a cybersecurity venture with Vista Equity Partners. This new cybersecurity company now aims to fend off a variety of attacks.

Raytheon, a defense contractor, is forming a new joint venture with Vista Equity Partners' Websense in a move that aims to pitch defense grade cybersecurity.

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The value of the new venture is about $2.3 billion, said Raytheon, which paid $1.57 billion for an 80.3 percent ownership stake in the venture. Raytheon bought Websense for $1.9 billion and $600 million of that sum is an intercompany bond. Vista Equity will invest $335 million for a 19.7 percent stake in the company.

According to the Raytheon, this joint venture will consist of Raytheon Cyber Products, a unit of the company's intelligence, information and services unit, and Websense, which has its Triton cybersecurity platform.

On a conference call with analysts, Raytheon CEO Thomas Kennedy said the company is looking to grow by bringing its technology to a broader set of customers---notably enterprises. He said:

This new organization creates world-class service security companies that will offer a broader set of integrated products that can be tailored to enterprise need.

Indeed, Websense will broaden Raytheon's vertical footprint by addressing a wider set of industries such as manufacturing, business services, healthcare and education. Here's how the product lines will fit together.


Kennedy also said that the time is right to combine an enterprise security company with one that has defense industry chops. Kennedy said "we face increasingly sophisticated attacker nation states now targeting business as a means of nontraditional warfare" and "organized crime is a growing threat." Add in evolving enterprise security risks such as the Internet of things and vendors will have to be able to address multiple threats, he said.

The new company will be rolled into Raytheon's results. Websense CEO John McCormack will lead the venture once the deal closes later this quarter.

Raytheon is hoping its defense experience will apply to corporations. Websense will get a larger sales channel footprint via Raytheon. Websense has more than 21,000 customers.

For the joint venture to pay off, it will have to utilize Raytheon's cybersecurity patents to cook up a security stack that will apply to the Internet of things as well as fend off unique attacks on enterprises.