US aerospace and defence contractor Raytheon has made a further bet in the fast-growing cyber security market with a US$1.9bn deal to buy Texas-based Websense. The group plans to later sell a 19.7% stake in Websense back to its current private equity…
US aerospace and defence contractor Raytheon has made a further bet in the fast-growing cyber security market with a US$1.9bn deal to buy Texas-based Websense.
The group plans to later sell a 19.7% stake in Websense back to its current private equity owner Vista Equity Partners for US$335m, with the two running it as a joint venture.
The deal will see Raytheon expand its growing cyber security portfolio for the defence industry to customers such as banks and retailers.
Thomas Kennedy, Raytheon’s CEO and chairman, said: “The market for advanced cyber solutions that protect and defend global industry and infrastructure is rapidly growing due to the sophisticated threats posed by well-funded, nation-state adversaries and criminal networks.
“As the business enterprise evolves to meet the networked demands of today’s mobile and cloud economy, these threats will grow in size and scale. The new joint venture will combine Raytheon Cyber Products and Websense capabilities to deliver the advanced, defence-grade technology solutions needed to meet this evolving threat.”
Raytheon is contributing US$400m worth of its own cyber products and intellectual property to the JV, giving it an enterprise value of US$2.3bn. The group also said US$600m of its initial acquisition will be in the form of an intracompany loan to the venture.
Websense claims more than 21,000 customers across 155 countries and a delivery channel of over 2,200 partners.
Its acquisition comes after Raytheon snapped up Blackbird Technologies in November for US$420m, giving it added cyber security tools for the defence market, as well as satellite-based tracking, asset recovery and communications products.
Branching out of the defence market will help Raytheon combat a decline in US government spending. This decline prompted the group in 2013 to consolidate its six businesses into four units, including the Raytheon Intelligence Information and Services division that holds its cyber security assets.
Raytheon hired RBC Capital Markets as lead financial adviser for the Websense deal, with Deutsche Bank serving as co-adviser. Credit Suisse delivered a fairness opinion to its board.
Morgan Lewis & Bockius, Steptoe & Johnson and Wilson Sonsini Goodrich & Rosati served as Raytheon’s legal advisers.
Websense mandated Citi as exclusive financial adviser to Websense, and Kirkland & Ellis as legal adviser.
The companies expect to close the deal in Q2 2015.
