Baltimore Technologies, the Irish e-security specialist, yesterday announced its largest acquisition to date by paying £702.5m in shares for the Berkshire-based firm behind the popular MIMEsweeper email security product.
Content Technologies Holdings was founded five years ago by David Guyatt and Andy Harris who make a combined £180m from the takeover.
Baltimore said the deal would increase its presence in the US, where Content does much of its business, and present numerous opportunities for the cross-selling of products between the two companies' customer bases.
The acquisition dwarfs Baltimore's previous largest - the £100m takeover of CyberTrust - and to complete a momentous day the Dublin-based firm said it had appointed a new finance director whose first job would be to raise a further $100m through a share placement to provide working capital.
Analysts' eyes were however on the Content deal. MIMEsweeper has 40% of the content security market, the technical term for email applications that prevent breaches of security and the circulation of illicit material at large companies.
Baltimore's executive vice president of marketing, Paddy Holahan, said the market is growing at 71% per year and can prevent corporate secrets and malicious information from escaping from companies via email and stop pornography and viruses from being circulated within them.
"Every internet company needs MIMEsweeper," he said. "Whichever way we slice this deal we see huge potential for selling new products both to our customers and Content's." Baltimore has a large number of financial institutions as customers, while Content sells to numerous medium-sized businesses.
Content's 200 staff serves around 6,000 customers and 6m email users worldwide through four offices in the US and centres in Europe, Australasia and Japan. "This acquisition is about taking a leadership position in the e-security field and should distance us from any competitor," Mr Holahan added.
A total of 91m new Baltimore shares will be issued at 772p per share to fund the £702.5m deal. Analysts said that while the price of the deal appeared high, with Content being valued at almost 40 times its annual sales, Baltimore shares trade on an even higher multiple and it could afford to issue the new shares at this level. Shares in Baltimore fell 12p to 760p.
Mr Guyatt, chief executive of Content, said joining forces with Baltimore would enable it to roll out new products faster and give it access to a wider customer base.
Paul Sanders, group finance director at SSL International, will become chief financial officer in November. The 36-year-old's experience in making strategic acquisitions suggests that Baltimore will pursue further deals.
His appointment follows Tuesday's resignation of the chairman, Henry Becker, who has left to devote more time to a project to give every school child in Britain a laptop computer.
Deputy chairman Peter Morgan has been promoted to take his place.
