Security Companies Plan Merger

Computer-security companies TruSecure Corp. and Betrusted Holdings Inc. said last week they would merge to create a new company called Cybertrust that would sell a portfolio of technology and consulting services in domestic and foreign markets and could become one of the largest specialized companies in the computer-security field.

Cybertrust will sell consulting services that can help businesses evaluate and upgrade IT systems to comply with U.S. government regulations such as the Sarbanes-Oxley Act and the Gramm-Leach-Bliley Act, as well as with international regulations such as Basel II, says TruSecure chairman and CEO John Becker, who will become CEO of the combined company. "It's about understanding your defensive posture," he says.

"There's big potential here," says Pete Lindstrom, research director at market-research company Spire Security. The combined company would have annual revenue of more than $160 million and about 4,000 customers. Terms of the stock deal weren't disclosed, but the companies expect it to close in a month. The new company will be able to sell PKI products and services from Betrusted and risk-management consulting from TruSecure, as well as their combined network-security-monitoring services, to companies in the United States, Europe, and Asia.

The merger follows a recent string of acquisitions in the field. Earlier this month, Symantec Corp. bought application security company @stake. In August, McAfee Inc. acquired consulting firm Foundstone for $86 million.

Cybertrust will be among the top five largest dedicated computer-security vendors, says John Pescatore, VP and research fellow at Gartner. But he questions how well Cybertrust's products and services will fit together. "Most of these services have done reasonably well standalone," he says. "If that's the case, why merge?"