LONDON -(Dow Jones)- Defense company BAE Systems PLC (BA.LN) Friday extended its reach in the cyber and intelligence services industry with a EUR217 million deal to buy Norkom Group PLC (N5OK.DB), which provides banks and financial institutions with services to combat fraud and money laundering.
Farnborough, England-based BAE is making a concerted push into cyber security at a time when governments are ramping up spending on unconventional threats. The British government, for example, in its strategic defense and security review in October announced it would invest GBP500 million over the next four years to detect and defend against cyber attacks. Such threats include energy security, organized crime, counter proliferation and border security.
Norkom will complement BAE Systems’ Detica unit, which provides counter-fraud software for collecting, managing and exploiting information for public and private sector clients.
“The combination will result in a significantly enhanced offering for customers and present an opportunity for accelerated growth for the group in the fast-growing cyber and intelligence services sector,” said BAE Systems Chief Executive Ian King in a statement.
BAE Systems acquired Detica in 2008 for GBP545 million, but it picked up the pace of acquisitions in the sector last summer. In September, it paid $295.8 million for L-1 Identity Solutions Inc.’s Intelligence Services Group, a leading provider of security and counter threat capabilities to the U.S. government, and in November it acquired Australian information security company stratsec.net Pty. Ltd. for A$24 million.
Dec. 22, it said it had agreed to pay 1.2 billion Danish kroner (GBP137 million) for cyber and intelligence services provider ETI A/S and certain associated companies.
Investec Securities, in a research note, reckoned that BAE Systems now generated about $2 billion in annual revenue from its security business, making it a “serious player.”
The acquisition of Norkom looked expensive at roughly 4.4 times fiscal 2010 sales, but was highly complementary to Detica’s data-crunching product NetReveal, Investec said. It retains a buy rating on BAE Systems and a 400-pence price target.
At 1223 GMT, BAE Systems’ shares traded down 2 pence, or 0.5%, at 341 pence while the benchmark FTSE 100 index traded down 1.2%. The company’s shares have shed 2.6% in value in the past 12 months largely on concerns about cuts in defense spending.
BAE Systems agreed to buy Dublin-based Norkom for EUR2.10 per share in cash, a premium of about 36% to Norkom’s closing price Thursday and about 121% above the closing price Nov. 25, the last business day prior to the commencement of its offer period. The board of Norkom, a company with about 350 employees world-wide, recommended the offer.
Norkom’s shares traded up 36% at EUR2.10.
Copyright © 2011 Dow Jones Newswires
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Category: Cyber Fraud