VeriSign, one of the best-known names in computer security, today took a step away from the security business by selling its authentication services business to Symantec for $1.28 billion.
VeriSign's authentication business, which includes the Secure Sockets Layer (SSL) encryption certification services, a managed Public Key Infrastructure (PKI) platform, and the company's ownership stake in VeriSign Japan, contributed approximately $101.9 million to VeriSign's revenues last quarter -- about 39 percent of the company's business.
Symantec's acquisition follows the $300 million purchase of encryption pioneer PGP and the $70 million purchase of GuardianEdge, which were announced simultaneously just three weeks ago.
"The security space is consolidating in a way that favors larger players that offer lots of products and services in an integrated package," said Mark McLaughlin, president and CEO of VeriSign, in an investor teleconference this afternoon. "If you want to succeed in this market, you have to have a broad range of services, as Symantec does."
"For 15 years, VeriSign has pioneered the SSL and related authentication services business," said Jim Bidzos, VeriSign founder and executive chairman. "Today Symantec is the best company to drive this business forward."
The agreement provides that Symantec will acquire the assets of VeriSign's Authentication Services business, including its ownership stake in VeriSign Japan, as well as certain brands and trademarks, such as VeriSign’s "check mark" logo.
Symantec has indicated that it expects to offer positions to most of VeriSign's authentication employees to support the business. VeriSign has agreed to support the business after the transaction's close by providing transitional services to Symantec. Following the close of the transaction, VeriSign expects to eliminate some positions that will not move to Symantec and that will not be required for its future operations. The boards of both VeriSign and Symantec have unanimously approved this transaction, which is not subject to financing contingencies or shareholder approval. The transaction is expected to close in 60 to 90 days or upon receipt of regulatory approval. Following the close of this transaction, VeriSign's remaining business will consist of its Naming Services business, which contributed approximately $162 million, or 61 percent, of the company's revenues in the quarter ended March 31, 2010.
"We will continue to focus on the growth strategies we've previously articulated for our domain name and infrastructure availability businesses," McLaughlin said. "These include leveraging our existing infrastructure capabilities for new services, expanding internationally, and pursuing new top-level domain opportunities."
"Trust and identity are key to the future of securing and managing information," Symantec said in its announcement. "VeriSign is the leading provider of digital authentication services, enabling trusted interactions within and across businesses, consumers, applications, and processes. With identity security, Symantec solutions can enable information access control, enhanced data security, and better enforcement of compliance policies."