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NCipher buys intellectual property and assets of NeoScale Systems

11 December 2007  |  2062 views  |  0 Source: nCipher

nCipher plc (LSE: NCH), a global leader in protecting critical enterprise data, announces it has acquired the majority of intellectual property and assets of NeoScale Systems Inc. ('NeoScale'), a leading provider of encryption and key management products within the storage security market.

NeoScale, a venture-backed private company, based in Milpitas, California, provides a series of appliance-based encryption products under the CryptoStor brand. These are well-proven and widely deployed in hundreds of customer locations worldwide, protecting sensitive information stored primarily on back-up tapes and therefore avoiding concerns over data privacy in the event the back-up tapes are stolen or misplaced.

This acquisition of the CryptoStor tape product line provides a valuable addition to nCipher's product range, accelerating and strengthening nCipher's position in the rapidly expanding storage encryption market. In addition, nCipher has also acquired the NeoScale KeyVault technology and product line which will be used to further enhance nCipher's keyAuthority(TM) enterprise key management product.

In addition to enhancing nCipher's product portfolio, this acquisition will strengthen the Company's customer base and provide expansion opportunities in the North American and international markets. NeoScale has built an impressive network of resellers and OEM channels which has the potential to provide nCipher with the opportunity to address the encryption needs of new customers in a cost-effective manner and provide its channel partners with a wider and more compelling value proposition.

Commenting on the acquisition, Geoffrey Finlay, Chief Executive Officer, nCipher plc said: "High profile security breaches and regulatory pressure have propelled tape drive and storage encryption to the top of the priority list for data owners. The purchase of these assets by nCipher allows us to build on NeoScale's solid reputation for high quality products and first rate support.

"We are delighted to add NeoScale's in-line encryption appliance to our product portfolio to provide both new revenue opportunities and to extend the reach and scope of nCipher's keyAuthority key management system. We intend to engage with NeoScale's existing customers and chan Neo chan NeoScale's existing customers and channel partners as we seize this opportunity to further strengthen our position in the encryption market and expand our customer base. This acquisition reinforces nCipher's commitment to the important and growing storage security market, particularly in North America."

Storage security has become a top spending priority among new enterprise security initiatives, according to a recent Taneja Group* survey. Among the survey respondents, 68 percent rated storage security a top five concern, with nearly 30 percent rating it as their number one priority. Respondents also flagged global key management as a major concern, with 54 percent considering deploying a global key management system in the next 12 months.

Charles Kolodgy, research director at analyst firm IDC, said: "The need to secure data-at-rest continues to rise. Options available for the encryption of storage and archive systems include in-line encryption appliances and advanced tape drives with embedded encryption capabilities. No matter what encryption device is used, the ability to create, archive, and retrieve cryptographic keying material is paramount to a successful encryption program. nCipher's keyAuthority product is well suited to handling all enterprise key management requirements. This product already works well with tape drives and other embedded encryption and with the addition of the in-line encryption appliances from the NeoScale acquisition nCipher now offers customers additional storage encryption options."

Details of the transaction

nCipher plc has purchased certain assets that were previously owned by Neoscale Systems Inc., a US incorporated company, from Hercules Technology II, LP. nCipher has agreed to acquire the transaction assets, which principally include intellectual property, software, stock of finished goods, production equipment and CRM information for a consideration of approximately US $1.95 million in cash from the Company's existing cash resources. nCipher is not taking on any liabilities of NeoScale. In addition, nCipher has recruited key members of the NeoScale team and plans to continue operations from the same Milpitas facility.

* The Growing Importance of Storage Security & Key Management in Large Enterprises - The Taneja Group April 2007

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