Websense to Buy PortAuthority for $90M

Publicly held threat prevention software maker Websense aims to close a merger with PortAuthority, a smaller, privately held supplier of leak prevention products, for a cool $90 million in cash this January. (See Content Filtering Options Proliferate and Stop That Email!.)

While both Websense and PortAuthority are in the enterprise data protection space, execs deny there is any overlap between their wares. They are billing the matchup as one of Websense's control of inbound Web traffic (and reporting on employee use of the Internet) with PortAuthority's ability to filter outbound email and messages.

"There is no overlap. We both do content-based security. But Websense protects the network from malicious code, while PortAuthority guards against threats from the inside," says Cas Purdy, a spokesman for Websense.

Websense and PortAuthority already had plans for a combined product to be sold by Websense, which was slated for release in early 2007. Those plans remain, and a common policy engine will be set up for the integrated wares, allowing organizations to control data by user as well as by IP address or device.

Websense shares dropped slightly on the news and were trading at $23.96, down .25 (1.03 percent) this morning.

Websense, founded in 1994, went public in 2000. For the third quarter 2006, posted in September, it showed $46 million in revenue, 20 percent more year on year. The company claims 24,000 customers, including Bosch Siemens, Canon, Habitat for Humanity, and a range of healthcare service providers. Its technology partners include Cisco, Dell, F5, HP, Microsoft, NetApp, and Sun. The firm also has developed a content filtering product for wireless Internet users in cooperation with Nortel and other third parties, which it plans to release as a product in 2007.

Based in San Diego, Websense has 650 employees. CEO Gene Hodges will continue to lead the company, post-merger.

PortAuthority was originally named Vidius and scored a total of $41 million in funding from four main investors: Greylock, Lexington Ventures, NEA, and Sequoia. It claims about 70 customers, including Bank of the Sierra and the UN Federal Credit Union. (See UNFCU Picks PortAuthority.)

PortAuthority has about 60 employees, 40 of which are based at an R&D center in Israel, the rest working in Palo Alto, Calif. Websense plans to retain "as much talent as possible," Purdy says and will keep all PortAuthority locations open.

PortAuthority CEO Pete Foley, as well as those of the rest of the firm's management, won't announce their plans until after the merger closes.

At least one user is indifferent to the news. "I haven't really thought about it," says Roger McIlmoyle, director of technical services at TLC Vision, a multi-site laser eye-surgery provider based in Mississauga, Ontario. When told about the merger, he says his thought was, "Ah, whatever. As long as PortAuthority is still a functional product."

McIlmoyle once tried Websense software, he says, but back in 2003 he didn't feel his group needed what it offered for the price. "Controlling browsing, knowing whether an employee's productivity went down because they spent too much time on the Internet... that's what you have managers for," he quips. But he acknowledges that since 2003, the product could have changed considerably.

— Mary Jander, Site Editor, Byte and Switch