Security Bytes

May 30 2008   1:37PM GMT

Sourcefire says no, no, no to Barracuda’s takeover bid

David Schneier David Schneier Profile: David Schneier

Apparently, there is never a dull moment at the Sourcefire universal headquarters. The IDS company, which has gone through a failed acquisition by Check Point and an IPO in the last 24 months, is now fending off takeover bids. Sourcefire officials said on Friday that the company had turned down an unsolicited acquisition offer from Barracuda Networks, a maker of anti-spam appliances. Barracuda offered Sourcefire $7.50 per share, a premium of about 13 percent over Sourcefire’s share price at the time of the offer. Sourcefire’s stock has shot up more than a dollar per share since news of the offer became public Friday morning.

Sourcefire’s board gave little reason for rejecting the proposal, saying only that it is focused on finding a new CEO to replace Wayne Jackson, who announced plans to step down earlier this year. Joseph Chinnici, chairman of the board of Sourcefire said: “Sourcefire remains committed to maximizing stockholder value by continuing with its stated plans to complete its chief executive officer transition and growing the business by executing on its strategy.”

In a letter to Jackson, Barracuda CEO Dean Drako said the proposed merger would “offer significantly more security to FIRE stockholders, creditors, suppliers and partners than FIRE on a standalone basis. Equally important, this transaction provides additional opportunities for employees. We believe that the recent FIRE stock price reflects the execution challenges faced by the company’s management to date. We also feel that the company’s inaction in dealing with looming threat of litigation from Trend Micro has had an effect on the stock price, although we feel that the impact has not been fully priced into the FIRE stock.”

Sourcefire has been at the center of acquisition talks before, most famously its failed merger with Check Point, which flamed out amid concerns about regulatory objections to the Israeli company acquiring Sourcefire, whose technology is used in a number of government agencies.

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