The $643m move to take crypto vendor SafeNet Inc private has come into question, and broker Lazard has that SafeNet’s shareholders will give reject the bid by Vector Capital to hold out for a higher valuation.
Lazard believes the $28.75 a share offer is too low and calculates that the company is worth $34 a share. Unless Vector raises its bid, Lazard forecasts new bidders will move in.
Baltimore, Maryland-based Safenet has been badly hit by the discovery of stock-option irregularities which saw Anthony Caputo quit as CEO and acting CFO Carole Argo leave the company in October.
Contrary to Lazard’s opinion, new CEO Walter Straub said that over the past five months, directors looked at options facing the company, including a broad solicitation process that resulted in significant competitive interest. He said that Vector, it had identified a partner that was committed to assisting it to fully realize its opportunities.
Vector principal David Fishman said the challenges of being a public company could sometimes inhibit growth in companies like SafeNet. He said SafeNet would benefit from being a private company.
SafeNet’s main claim to fame is in encryption, including the high-end technology that only government agencies are allowed to use. Before last year’s scandal it tried and failed to acquire smaller UK rival nCipher, but the move fell down in the face of opposition from the UK’s monopolies watchdog.
Apart from encryption, SafeNet also has VPN client technology, with OEM customers of the clout of Cisco, and has been moving increasingly into digital rights management since it acquired Norwegian developer DMDSecure in April 2005.