Bullseye as Patriot missile firm Raytheon buys Websense in $1.9 billion deal

Security firms falling like skittles as defence giant turns to cybersecurity

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Ending one of the worst-kept secrets in the security industry, defence giant Raytheon is to buy Websense in a deal that will see it pay $1.9 billion (£1.26 billion) for the well-known security firm.

The deal between Raytheon and Vista Equity Partners, which took Websense private less than two years ago, features an unusually complicated architecture.

Raytheon will reportedly pay $1.57 billion in cash, $600 million of which will be in the form of a loan, merging it with its own security division – mostly acquired when it bought Blackbird Technologies last November - to form a new entity to which Vista will contribute $335 million for a 20 percent stake.

Operating as a new division of Raytheon, the Websense brand identity will apparently be retained although this hasn't been confirmed.

For Websense it’s the latest chapter in an increasingly complicated history that saw it taken private by Vista in 2013 for somewhere between $900 million and $1 billion. The ‘exit’, if one can call it that, means that Vista has made a tidy profit from that business plus it now also has a 20 percent stake in a new business with a strong sales channel.

The deal is well in excess of the figures being bandied around in March when news of the mooted sale first leaked out.

Raytheon’s strategy is not mysterious – build a cybersecurity business and quick.

Raytheon was also at one point in the running to buy Blue Coat Systems, eventually sold to Bain Capital for $2.4 billion last month. It’s not clear why that deal fell through but the difference in valuation between Blue Coat and Websense is one possibility.

It’s odd where security firms are finding themselves there days. Massachusetts-based Raytheon is best known as the maker of the famous Patriot anti-missile system used with contested effectiveness in the first Gulf War of 1991. As of March 2014 it employed 63,000 people.

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