VeriSign to Buy Leader in Managing Networks

Aiming to bolster its position as the biggest U.S. seller of Internet-security services, VeriSign Inc. on Wednesday said it had agreed to buy Guardent Inc. for $140 million in cash and stock.

The purchase includes about 150 of Waltham, Mass.-based Guardent’s full-time staff and an operations center in Providence, R.I.

VeriSign, based in Mountain View, Calif., already sells products and services to keep computer networks secure. Closely held Guardent’s business would expand VeriSign’s ability to manage networks and to anticipate attacks, one analyst said.

“This represents the No. 1 managed-security service provider, Guardent, getting together with the No. 2,” said Gene Munster, an analyst with U.S. Bancorp Piper Jaffray.

Shares of VeriSign fell 22 cents to $15.32 on Nasdaq. They have gained 91% this year.

“In addition to being a world-class company in its own right, Guardent is a perfect strategic fit,” said VeriSign Chief Executive Stratton D. Sclavos. “By combining forces, we will solidify VeriSign’s leadership in network security.”

VeriSign, the main administrator for assigning Internet addresses, is targeting profit from security services because demand for Web sites is slowing. Internet services, which include security, accounted for 43% of VeriSign’s third-quarter sales of $281 million.

Guardent could add $35 million to $40 million in sales in 2004, Munster said.

The agreement is scheduled to close next quarter and won’t reduce 2004 earnings, VeriSign spokesman Brendan Lewis said.