OFT puts skids under £86.1m nCipher sale
American company SafeNet has shelved its planned £86.1m acquisition of nCipher, the Cambridge internet security specialist after the bid was referred to the Competition Commission.American company SafeNet has shelved its planned £86.1m acquisition of nCipher, the Cambridge internet security specialist after the bid was referred to the Competition Commission.
The Maryland company said it was now considering its options. Meanwhile it is returning shares purchased to date to the relevant stockholders.
nCipher was also considering its options.
The Office of Fair Trading referred the bid to the Competition Commission, as a result of which the offer lapsed. nCipher’s share price fell 15 per cent to 252.50p.
OFT fears the monopoly achieved through integrating the businesses could force up prices to customers.
Vincent Smith, director of competition enforcement for the OFT said: “This transaction will bring together two of the largest suppliers of HSMs (Hardware Security Modules) in the UK. The loss of competitive pressure between the parties may lead to customers facing higher prices and a loss of innovation.”
The Competition Commission is expected to report its findings by September 13.
The deal was set to spectacularly cap nCipher’s 10th anniversary year and was recommended by both boards. It equated to 300 pence in cash for each nCipher share.
SafeNet had considered the acquisition of nCipher to be an attractive opportunity to add important expertise and capabilities, reinforcing its leading position in the broad IT security market.
It would have been SafeNet’s 11th acquisition in the past six years and the deal was expected to close by April. The acquisition would also have provided SafeNet with additional focus on key emerging technologies and vertical market applications such as data protection, payments systems, enterprise key management and identity management. Its profile in Europe would have been significantly enhanced.
Founded in 1996 by brothers Alex and Dr Nicko van Someren, nCipher develops internet security products that optimise the use of cryptography to protect critical points of risk – web infrastructure, authentication systems, databases, and payment processing networks –across the enterprise.
The company is headquartered in Cambridge, UK with offices in Boston, Washington, Hamburg and Tokyo.