McAfee (NYSE:MFE) today announced a definitive agreement to acquire the privately-held ScanAlert, creators of the fast-growing HACKER SAFE(R) Web site security certification service, for approximately $51 million in cash up front and with an earn-out of up to an additional $24 million if certain performance targets are met.
The acquisition will extend McAfee's leadership position in Web security, and will help to guide the more than 116 million U.S. consumers who shop online to safe e-commerce Web sites.
"Consumers are expected to spend nearly $160 billion dollars this year on products and services online, providing personal credit card information to e-commerce Web sites, many of which have traditionally been under-protected," said Dave DeWalt, chief executive officer and president of McAfee. "Through this acquisition, we will enhance McAfee's triple play protection-securing consumers on the PC, Web and mobile platforms-by integrating ScanAlert's e-commerce security certification service into our SiteAdvisor Web rating system. This will create the industry's only service that helps consumers stay safe as they search, surf, and now shop."
According to the Common Vulnerabilities and Exposure List, which is sponsored by the National Cyber Security Division of the U.S. Department of Homeland Security, vulnerabilities found in Web applications are now the most commonly found, surpassing those discovered in Microsoft Windows and desktop software.
"ScanAlert pioneered vulnerability assessment and certification for e-commerce sites to help eliminate one of the greatest risks to consumers' financial information. By becoming part of McAfee, we believe ScanAlert can extend Web certification to the next level, greatly benefiting consumers and the businesses who serve them," said Ken Leonard, chief executive officer of ScanAlert.
ScanAlert audits and certifies the security of 8,000 customers representing more than 75,000 Web sites, and its patent-pending technology protects more than 15 million e-commerce transactions each month. The HACKER SAFE security trust mark is displayed by over 60% of the Internet Retailer Top 500 list, including well-known brands such as American Red Cross, GUESS, PETCO, Toshiba and Warner Brothers.
Web sites earning HACKER SAFE certification derive multiplle benefits:
- HACKER SAFE's trust mark has shown to boost consumer confidence and drive an average of 14% increase in conversion rates.
- Increased visibility in comparison shopping services. Merchants may drive an increase in sales further by showing their HACKER SAFE certification in such comparison shopping site results as PriceGrabber.com, Yahoo!(R) Shopping and Pronto.com.
- Proactive monitoring. With daily scanning for vulnerabilities, e-commerce sites enjoy both an added layer of security as well as proactive monitoring so they can address potential security issues before they impact consumers.
- PCI compliance. ScanAlert also helps sites with compliance related to PCI, the payment card industry's security standard, by managing the external scanning requirement.
- McAfee SiteAdvisor integration. When the integration is completed, HACKER SAFE certified sites will be highly visible through SiteAdvisor. SiteAdvisor has been downloaded more than 90 million times. HACKER SAFE Web sites will also be McAfee SiteAdvisor tested.
ScanAlert will be integrated into McAfee's Web Security Group, co-led by Ken Leonard of ScanAlert and by Tim Dowling, a vice president under McAfee's consumer, mobile and small business unit, which is headed up by Senior Vice President and General Manager Todd Gebhart.
"The mission of the Web Security Group is to bring transparency to the Web so that consumers can distinguish between the safe neighborhoods and the dark alleys," said Dowling. "We already know from numerous studies that consumer confidence is eroding, and as a result, tens of millions of dollars are left unspent online. Incorporating this new level of proactive security clearly meets a market need, and further strengthens the industry-leading protections already integrated into McAfee Total Protection, McAfee Internet Security Suite and McAfee VirusScan Plus."
E-commerce sites certified as HACKER SAFE have undergone a comprehensive security audit, which scans the site for vulnerabilities and identifies and verifies security fixes. HACKER SAFE certification ensures consumers are protected both during and after the submission of personal or financial data to a Web site. Sites maintain their HACKER SAFE certification by passing daily scans by ScanAlert. Once the scan is completed and any detected security issues are fixed, the site qualifies for certification.
McAfee's SiteAdvisor has tested 95% of the trafficked Web and proactively warns users about risky Web sites with easy-to-understand ratings: red (risky), yellow (caution), and green (safe). Risky sites are those that deliver malware, contain browser exploits, display aggressive pop-up ads, try to scam a user, provide a poor online shopping experience, or send spam after submitting an e-mail address.
ScanAlert's projected 2007 bookings are $15 million to $20 million. The acquisition is expected to close in Q1 2008 pending satisfaction of customary closing conditions, and as such, there will be no impact on expected fourth quarter 2007 results. Assuming the transaction closes as anticipated in Q1 2008, the acquisition is expected to be dilutive to 2008 GAAP operating results and neutral to 2008 non-GAAP operating results.