Competition Commission involvement torpedoes nCipher deal
US company SafeNet has scrapped its proposed £86.1m acquisition of Cambridge internet security specialist nCipher.US company SafeNet has scrapped its proposed £86.1m acquisition of Cambridge internet security specialist nCipher.
The deal was put on hold last week after the Office of Fair Trading referred the bid to the Competition Commission fearing a monopoly that could force up prices to consumers.
The referral triggered a ‘lapse’ clause in SafeNet’s offer and it returned shares to nCipher stockholders while it considered its options.
The Competition Commission had said it would report the findings of its review by September 13 and the Americans felt it would be unproductive to get snarled in the process.
Accordingly, SafeNet has now decided that: “as the additional review process involves considerable expense and lasts for several months, SafeNet has decided that it will no longer proceed with this transaction.”
The original offer, which was recommended by both boards and came in nCipher’s 10th anniversary year, equated to around 300p per share.
However, nCipher’s shares have slumped considerably since then. The withdrawal of the offer saw a further 3.5 per cent shaved off the price to 243.5p.
nCipher has not been fazed by the affair and a statement issued by the company suggests that it is inclined to take a positive view of the experience.
It says: “The recent investigations, and subsequent referral to the Competition Commission, have identified nCipher as one of the largest suppliers of HSMs in the UK and worldwide.
“The very high regard in which customers hold nCipher, its products and its after-sales service has also been emphasised to us by the consultation process.”
“nCipher's board believes that good growth opportunities exist within the markets
in which the company operates and we intend to work towards maximising shareholder value by focusing on additional growth opportunities and driving further operational improvements in the business.”
nCipher specialises in the application of cryptography to protect electronically stored information and internet transactions.