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ISS snaps up Network ICE for $195m

Internet Security Systems (ISS) yesterday announced that it had reached an agreement to acquire Network ICE, a maker of desktop security products, in a deal valued at $195m (£136m).

The deal, which will marry the publicly traded ISS's line of corporate security products and services to privately-held Network ICE's desktop firewall, virtual private network (VPN) and intrusion detection systems, will be an all-stock transaction, based on the Friday closing price of ISS's stock. ISS will issue 4.3 million shares of ISS common stock for Network ICE. The move has already been approved by both companies' boards of directors and has the assent of the owners of 70% of both companies' stock, according to ISS. The deal is subject to standard regulatory approvals and is expected to close in June, ISS said.

The combination of ISS and Network ICE will create "the most pervasive protection system in the industry", said Tom Noonan, ISS president and chief executive officer, in a conference call. ISS will now be able to offer a comprehensive security service to its customers, which will secure desktops, servers, gateways, mobile devices, remote workers and telecommuters, all from one centralised administration point, he said

Network ICE offered three key improvements to ISS, Noonan said. First, the ability to secure desktop systems; second, increased scalability of security offerings, which will help drive ownership costs down for customers; third, the ability to significantly enhance managed security services, thus lowering costs, but also raising margins.

As a result of the deal, ISS also issued an updated financial forecast for the second quarter. ISS said it expects that the deal will result in additional quarterly revenue of $10m to $15m, with total revenue for the quarter expected to come in at $295m to $300m. The company also said that earnings per share ought to be in the 65-70 cents range. ISS's earnings will be announced in the third or fourth week of July, the company said.

In mid-morning trading, ISS stock (ISSX) was down 87 cents, or 1.8%, to $49.02.

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