Cyber-security firm FireEye to sell products business for $1.2 billion

Cyber-security firm FireEye
to sell products business for $1.2 billion

In the US history, the cyber-security firm has handled many of the most high-profile hacking incidents

On Wednesday, the US cyber-security firm FireEye said that it would sell its products business, including the FireEye name, to a consortium led by private-equity firm Symphony Technology Group for $1.2 billion in cash.

The deal will separate FireEye’s network, email and cloud security products from its cyber forensics unit, Mandiant Solutions.

The deal is expected to close by the end of the fourth quarter, the cyber-security firm said.

The company’s board had approved a share buyback program of up to $500 million, said FireEye, one of the largest and best-known cyber-security firms in the United States.

Mandiant, founded by Kevin Mandia was originally acquired by FireEye. Kevin Mandia became FireEye’s chief executive, for about $1 billion in early 2014. Following the deal, Mandiant will return as an independent company, focused on cyber-incident response and cyber-security testing, and will be publicly traded.

“With the separation, you get simplicity, you get focus. Together we’re in a lot of markets”, Mandia said in an interview with Reuters about the sale. “A lot of it really was resource constraint”.

“FireEye can’t do everything”, he added”.

In the rapidly evolving U.S. cyber-security marketplace, the purchase of FireEye marks a major turning point. In just the past several years, the still nascent industry has seen numerous companies bought and merged.

In March, Symphony also purchased McAfee Corp’s enterprise business division for about $4 billion. Last year, chipmaker Broadcom Inc. purchased the enterprise business of Symantec, another major industry player, for about $10.7 billion.

In the US history, the cyber-security firm has handled many of the most high-profile hacking incidents. It is also recognized for its track record of attributing cyber-attacks to specific foreign hacking groups from Russia, China, Iran and North Korea.

Its clients have included firms like Equifax Inc., Target Corp and Sony Pictures, each of which has dealt with hacking incidents.

More recently, the cyber-security firm was called in to respond when a group of Russian cyber criminals hacked and held for ransom a major U.S. pipeline operator – Colonial Pipeline – leading to gas shortages and price spikes. Less than a week later, Colonial restarted operations.

Because Mandiant was in the field finding new cyber-attacks, which informed product updates, FireEye said it had a market advantage for years.

Frank Verdecanna, Chief Financial Officer of Mandiant and FireEye said that while the two companies had an agreement in place to continue their cyber-threat intelligence-sharing partnership, the acquisition “unlocks” Mandiant and allows it to partner with outside firms such as Microsoft Corp.

“We want to be known as unvarnished truth. There is no bias”, Mandia said.

Verdecanna said that roughly half of FireEye’s existing staff would move to Symphony, while the others would re-join Mandiant.

FireEye shares initially fell 4 per cent in after-hours trading after the announcement, but are now trading flat.

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