HP has acquired security company ArcSight for $1.5 billion (€1.1 billion), the latest in a wave of software deals by IT hardware companies.
The firm will pay $43.50 cash per share for Nasdaq-listed ArcSight, which provides security and compliance solutions and consulting services for businesses and government agencies.
HP’s Nasdaq stock rose 4 cents to 38.32 on Monday following news of the deal. Arc Sight’s share price rose 25.1% to 43.91.
Arc Sight CEO Tom Reilly said the merger would offer “enhanced enterprise threat and risk management solutions that will create broader visibility, deeper context, and faster remediation that will reduce risk and improve compliance.”
The announcement follows Intel’s acquisition of IT security company McAfee for $7.68 billion, prompting speculation about further M&A activity in the sector.
In a research note, investment bank Jeffries said this wave of M&A could lead to deals for security companies such as Symantec – which itself acquired Verisign's payment authentication unit in May for $1.3 billion – as well as Sourcefire, Fortinet, Vasco Data Security, Check Point Software, Blue Coat Systems and Websense.
Symantec's share price has spiked in the hope of a deal, the Wall Street Journal said, noting it has grown nearly 20% since Intel announced the McAfee acquisition.
FT’s Lex column said HP’s ArcSight deal “makes some strategic sense” despite the “90 times prospective earnings multiple.”
It noted that Symantec was “worth less than the $13.5 billion value put on the all-stock merger with Veritas agreed in 2004, since followed by a series of smaller acquisitions.”
The trend also forms part of a wider consolidation in the tech industry. In the last month alone, HP won a bidding war against Dell for storage company 3Par, Intel purchased Infineon's wireless solutions business, and Cisco acquired IP wireless firm Arch Rock.