Thursday, February 23, 2006

Feds Delay Check Point Acquisition of Sourcefire

Based on a friend's tip, I found myself looking for this press release, which reads in part:

Check Point® Software Technologies Ltd. (NASDAQ: CHKP), the world leader in securing the Internet, received notice its pending acquisition of Sourcefire®, Inc. has moved into the investigative stage with the Committee on Foreign Investment in the United States ("CFIUS").

In order to clear the transaction with the United States Government, Check Point submitted two regulatory applications. Check Point received U.S. anti-trust approval and was advised that CFIUS would continue reviewing the application during a 45-day investigative period...

Pursuant to the Exon-Florio legislation, CFIUS reviews proposed foreign acquisitions of U.S. companies in order to protect national security while maintaining the credibility of the United States open investment policy. The Exon-Florio legislation provides for a 30-day review following notification of a potential acquisition. CFIUS has the option to extend the review period for an additional 45-day review (or "investigation").


That press release excerpt sounds fairly tame, but this article is more interesting:

CFIUS has 30 days in which to examine an acquisition. It can extend that period by 45 days for the purposes of investigation. This is exactly what has happened to Check Point. What's more, once the status of an examination becomes "investigative", the acquisition comes under the purview of none other than US President George W. Bush. At the end of the 45 days, CFIUS submits a report to the president, who must announce his decision within 15 days.

All in all then, taking into account the initial 30 day period, the 45 day investigation period, and the 15 days for the presidential decision, it can take 90 days from the initial examination of the application until the president informs Congress whether he chooses to block the deal or not. For Check Point, only the first 30 days have gone by, so that, theoretically, closure of the deal could be put back to the second quarter...

In the case of Check Point and Sourcefire, it is still not clear what the cause pf CFIUS's concern is. It is a fairly rare occurrence for it to choose to investigate such a low-value deal.


Another friend pointed me to this article:

Most foreign U.S. deals are approved after CFIUS completes an informal 30-day probe, but this transaction has raised the eyebrows of some of the panel members, leading to the lengthier examination.

"The fact that they launched a 45-day review means that some serious concerns are being raised," said a national security consultant who formerly worked at the Department of Defense.

Sources said CFIUS representatives from the Department of Defense and the Department of Homeland Security are worried that the deal gives critical computer network security technology to Israel. Sourcefire develops network security and information management systems for Defense Department agencies, in addition to private industry clients.


I'll keep my eye on this. I bet the deal will go through, with the government getting source code access to all Sourcefire products.

6 comments:

Anonymous said...

BTW folks, this is the same CFIUS that *didn't* "investigate" the Dubai Ports World thingy.

Snort? Get out the microscope.

Foreign operation of our ports? No biggie.

:^)

Anonymous said...

Ditto on what The first Anonymous poster said. This is ridiculous for this to be investigated heavily while the ports issue wasn't a big deal (until it was exposed).

Anonymous said...

This is a _big_ thing is certain parts of the govt. As we all know Checkpoint isnt really the most widely accepted firewall in the DoD/IC - due to thier Israeli ownership. However, Sourcefire has been, in recent years, a widely deployed solution within the same community.

With this aquisition all of that changes. Whats a poor contracts guy to do.. ;)

Rumint says that SecureComputing, SafeNet, and McAfee are making a big big deal about this.

Oh well.. ASIM will save us all. Right?

Brian said...

Great post Rich! Good focus on the facts.

Roland Dobbins said...

Why have you switched your weblog over to summary feeds? Summaries are really annoying, please re-enable the full-text feeds, many thanks!

Richard Bejtlich said...

I haven't changed anything. It's either Blogger's fault, or the fault of the site I use to transform Blogger's Atom feed into RSS. Sorry!