Dell snaps up network-security specialist

In its ongoing effort to become an end-to-end business-technology company, Dell buys SonicWall to beef up its security software.

By Benzinga Mar 13, 2012 5:29PM

Image: Couple with laptop (© Image Source/SuperStock)By Katey Stapleton, Benzinga Staff Writer

Dell (DELL), which is trying to transform itself into a full-service technology provider for businesses, has bought a network security company for a reported $1.2 billion.

Dell announced Tuesday that it will acquire privately-held SonicWall, which makes tools that help companies filter Internet content, secure their Internet access and protect digital communications between offices.

While details are being kept under wraps at the moment, FBN Securities said the deal could cost Dell around $1 billion. The Wall Street Journal reported a price tag of $1.2 billion.

The deal, which is expected to close in the second quarter, expands Dell's security offerings, analysts with FBN said in a research note. Dell has made acquisitions in this area before, picking up information-security company SecureWorks last year and systems-management company KACE in 2010, the analysts added.

SonicWall offers four key firewall products: the high-end SuperMassive, E-Class NSA, NSA and TZ. SonicWall has long been affiliated with Dell, bringing an estimated 300,000 customers to the company over the years.

After making its name in the consumer PC sector, Dell has begun a shift into the more profitable area of business computing. It's trying to position itself as an end-to-end provider of all the hardware and software a medium to large-sized company would need, from servers to laptops. Computer and network security are a vital part of that offering, which is where SonicWall comes in.

"We are building a strategic software portfolio to address the needs of our customers," John Swainson, president of Dell's software group, said in a statement. "Our customers see security as a key IT concern for the foreseeable future."

The buyout firm selling SonicWall to Dell, Thoma Bravo LLC, will become better capitalized after the deal pulls through. It may end up making a bid for Brocade Communications Systems (BRCD), according to FBN Securities.

The acquisition won cheers from some investors. Dell's share price rose 1.6% Tuesday to close at $17.23. Jefferies commented in a research report that Dell has calculated quite the strategic impact through this merger, regardless of time playing a role.

"Dell will be able to leverage its distribution and customer relationships to sell more SonicWall product," Jefferies commented, maintaining its "hold" rating and $17 price target on the company." We think this adds more tools to Dell's cloud stack but that a more unified offering is unlikely before [2013]."

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Mar 14, 2012 12:16PM
Mar 14, 2012 11:05AM
Dell's a smart company. It'll be interesting to see how this plays out.
Mar 14, 2012 10:47AM
I think this will really benefit Dell!
Mar 14, 2012 10:45AM
Not really in Dell's business. I guess they have to pull out all the stops to make money, as Apple eats away their customers everyday.
Mar 14, 2012 10:44AM
Looks like Dell is focusing more on becoming B2B and less on the consumer. Makes sense, I think tablets will dominate the consumer PC segment for the next few years.
Mar 14, 2012 10:31AM
Tis the season for M&A. Talent acquisition is smart though and I like the space Dell is getting into here. They just need to make sure the don't over extend and have a solid foundation for this merger.  
Mar 14, 2012 9:04AM
Good move on Dell's part to seek a competitive edge by focusing their efforts on one target market but I'm not sold this is going to do much for the company. 
Mar 14, 2012 7:28AM
Dell? network security? pleh. That's like saying Microsoft and reliable game consoles that don't face the "red ring of death" and cost the company $1 billion+ in repair fees. But hey...wait a minute! Microsoft DID incur $1 billion+ in repair fees because of faulty consoles!
Mar 14, 2012 7:21AM
Dell is on a roll lately with partnerships and acquisitions!
Mar 13, 2012 11:26PM
Wow, was unaware sonicwall had that enormous of a value. Have implemented and maintained many of their products over the years, they are very powerful and customizable products. Good pickup on Dell's behalf.  
Mar 13, 2012 11:21PM
Wow, never would have seen this one coming - I had imagined that Dell would stay in the same industry until it eventually died out. 
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