- FireEye sells its commercial and name products to the firm PE Symphony in a $ 1.2 billion deal.
- CEO Kevin Mandia says the company, soon to be called Mandiant, will provide the services.
- Experts say the deal allows FireEye to focus on its growth business, and cut a stagnation.
- See more stories on the Insider activity page.
Eight years ago, the prominent $ 6 billion cybersecurity company FireEye acquired the startup in response to the Mandiant incident. That deal was canceled by a CEO who seems happy to split the two.
Kevin Mandia, the chief executive, used the word “unlock” five times in an investor call Wednesday, where he announced that FireEye has agreed to sell much of its business to the company’s cybersecurity products, including the FireEye, to Symphony Technology Group, a private equity consortium, in a transaction totaling $ 1.2 billion. Shares of FireEye fell nearly 6% in trading at the end of the market Wednesday after the announcement of the deal.
The agreement allows Mandia to follow its lead with the company’s investigation and threat arm, which helps customers track and respond to data breaches and other cyber threats. Following the closure, the company will continue to be a listed company like Mandiant, with a ticker symbol to be announced in the coming weeks, the company said.
Following his comments on the call, Mandia believes this aspect of the business is the future of the company – and, by extension, FireEye’s more traditional product range is not. FireEye built on-site cybersecurity products that protected companies ’computer systems, guarded their mail systems, and coordinated various networks. He then added cloud security and laptop security products, but found less success.
“We believe the separation will unlock our high-growth Mandiant business,” Mandia told investors. That business will be “in a unique position to meet a huge market need,” he said.
Some experts say the separation – with 1,300 employees going with the products at Symphony and the remaining 2,150 standing behind the entity soon to be known only as Mandiant, the company says – is a necessary move to get the most out of it. of two halves of a company that didn’t seem to even intertwine into a single ensemble.
“The deal has always been forced,” Forrester’s senior cybersecurity analyst Brian Kime told Insider. “It must have been a moment when the two brands separated.”
Mandia first came into FireEye in 2013 when it acquired Mandiant, the threat intelligence company it founded nearly a decade earlier, for $ 1 billion. He went on board as chief operating officer of FireEye before being named president in 2015 and then CEO in 2016.
Under his leadership, Mandiant signed a leading brand in FireEye. The threat intelligence unit has built a reputation for hunting down advanced groups of hackers with links to national states such as China and Russia, providing key intelligence that has informed U.S. cyber operations against their opponents. More recently, Mandia has emerged as a leading voice encouraging the federal government to take stronger action to combat
Mandia is now able to shine in the aspect of research and cybersecurity services where its eponymous company shone, and abandon what was generally seen as mediocre enterprise software products. At least, that’s the plan.
“This allows Mandiant to focus on what’s best without supporting a portfolio of solutions facing stiff competition,” said Mark Cash, senior equity analyst at Morningstar. “Cybersecurity has a lack of talent and Mandiant has the expertise to fill that gap.”
Having said that, Cash said he understood Mandia’s apparent enthusiasm. “This allows them to – I don’t mean ‘cut bait’ – but get rid of the things that hold them back.”
The company’s product side – and the name FireEye – will now be owned by STG, a private equity group that counts the cybersecurity companies RSA and Red Seal between and its portfolio companies.
The company said in a blog post that the move “will separate the FireEye network, email, endpoint, and cloud security products, along with connected security management and the orchestration platform, from software-controls Mandiant agnostics and services “.
The transaction is scheduled to close at the end of the fourth quarter of 2021. FireEye and Mandiant will continue to operate as a single entity until the transaction closes, the companies said. in a blog post.
The company expects about $ 1.1 billion in revenue after taxes, said CFO Frank Verdecanna. According to Verdecanna, the FireEye board has approved a $ 500 million repurchase plan, which said the company may begin buying shares before the deal closes in the fourth quarter of 2021.
“It’s good to be back in the saddle to perform on our shared vision,” Verdecanna said in the call Wednesday.
Goldman Sachs serves as financial advisor, and Wilson Sonsini Goodrich & Rosati PC acts as legal advisor, to FireEye. UBS Investment Bank and Jefferies LLC act as financial advisors, and Paul Hastings LLP acts as legal counsel, at STG.