After more than a month of rumors that Austin, TX-based Websense and its private equity owners were looking for a buyer, Boston-area defense contractor Raytheon announced today it is acquiring the cybersecurity company in a $1.9 billion cash and debt deal.
Raytheon offers customers, mostly governments and their militaries, products such as missile defense systems, cybersecurity software, and various engineering services. The company plans to merge Websense, which was owned by Vista Equity Partners, with a unit of its business also focused on Web security, called Raytheon Cyber Products.
San Francisco-based Vista Equity is investing $335 million of the $1.9 billion for a 19.7 percent stake in the new joint venture. Raytheon, which is contributing $1.57 billion in cash for the other 80.3 percent, says its Cyber Products division is valued at $400 million. The overall $1.9 billion purchase price includes a $600 million intercompany loan between Raytheon and the new joint venture.
For Websense, the news caps an active couple of years. The company was taken private in 2013 by Vista Equity for $906 million, then uprooted and moved to Austin from San Diego. Just last month, Vista Equity began looking for a buyer for the business, as Xconomy’s Bruce Bigelow reported.
Websense’s Internet security technology is intended for entities like large corporations or governments. In January the company introduced the latest version of its Triton cybersecurity technology, which is used to prevent data theft and protect systems and devices.
Today’s deal is expected to close in the second quarter of this year, and Raytheon plans to announce a new name for the combined companies at that time, according to spokesperson Pamela Erickson. The new company will be a separately reported Raytheon business segment after the deal closes, Raytheon said in a statement.
John McCormack, the current CEO of Websense, will take over as CEO of the new business.
Raytheon has been bolstering its Web security products since long before the Websense deal, having made 14 acquisitions of cyber-related companies since 2007, the company says in its annual report. Most recently, it paid $420 million for Blackbird Technologies, a cybersecurity company that provides persistent surveillance and secure tactical communications.
“We believe cyber is a strong growth market, offering Raytheon the potential to leverage our extensive capabilities, to enhance existing customer relationships, to develop new customer relationships, and to grow and scale our cyber business,” Raytheon says in its annual report.
Raytheon’s Cyber Products unit is housed within its Intelligence, Information, and Services business segment, which had almost $6 billion of the company’s $22.8 billion of net sales in 2014, according to the annual report.
Before Vista Equity took Websense private, the company reported $361.5 million in revenue for 2012.
