ArcSight ‘s software is designed to protect digital assets against cybercrime. The company offers assistance with regulation compliance. Its clients include utility and telecommunication companies, state agencies, and financial services.
HP agreed to a payment of $43.50 per share in cash, a 24 percent addition to the closing price last Friday. Market analysts believe in the possibility of rival bids from IBM, Oracle, Cisco Systems or Dell. If ArcSight accepted a better offer, the agreement with HP includes a merger termination fee of $61 million.
In August, the computer maker also acquired data storage company 3PAR Inc. The value of the current transaction is worth 6 times the expected revenues of ArcSight for 2011. Although analysts believe HP overpaid, they also see ArcSight complementing HP’s convergence of networking and their servers and storage strategy. This is the second significant acquisition made by HP since the departure of CEO Mark Hurd, following a sexual harassment investigation. Analysts warn about possible investor anxiety towards HP’s aggressive spending strategy in the absence of a CEO.
This acquisition is in line with a consolidation tendency in the security technology sector. In May Symatec Corp. purchased Verisign Inc’s payment authentication division for about $1.3 billion, followed by the recent $7.7billion deal between Intel Corp and McAfee.