IronPort Acquires PostX in Move to Boost Margins, Improve IPO Prospects

In a stock-for-stock transaction between two private companies, email-security vendor IronPort Systems has announced the acquisition of email-encryption vendor PostX.

The acquisition will enhance IronPort’s regulatory-compliance offerings by allowing it to integrate PostX’s native email encryption into its email-security appliances. According to a news item at Computer Business Review, IronPort also intends to bundle the PostX technology into hosted email security services, which would take it into competition with some of PostX’s OEM partners, among others.

When the deal has been completed, in about five or six weeks, PostX shareholders will own about seven percent of the merged company, according to an IronPort spokesman. PostX’s 60 employees are expected to be relocated to IronPort’s San Bruno, Calif., headquarters, and no layoffs are expected as a result of the acquisition.

This is a logical move for IronPort, which gives it a fuller email-security solution with the addition of encryption and lexicons for extensive regulatory-compliance coverage. The acquisition should help IronPort defend and improve its profit margins. Where it partnered previously for encryption, it now will be able to own and offer an integrated solution to customers.

Competitively, the move helps IronPort compete against some of the many smaller players in the email-security space, but it does not offer sustainable advantage against the likes of Symantec or Microsoft, which both intend to take larger shares of the messaging-security space for large enterprises and SMEs.

If IronPort moves into hosted services, as seems inevitable, it will compete against formidable rivals, including Microsoft and MessageLabs, though there is room for another compelling offering.

Will the acquisition better position IronPort for an IPO? It probably will make an IPO more likely by next spring, presuming that the post-merger integration of PostX goes well, which it should.

IronPort has been looking to own and offer more of its own in-house products and technologies rather than to rely on partners for certain aspects of email security.

The company had a reseller relationship with Symantec for the latter’s Brightmail anti-spam technology, but it recently decided to end that partnership and to offer its own anti-spam technology exclusively to its customers. Again, the objective was to reduce external dependencies and to boost profit margins in a market that has been commoditizing and consolidating.

Nonetheless, IronPort is continuing to partner in some areas. It announced yesterday a partnership with data-loss prevention vendor Vontu that will see an integration of the two companies’ technologies for joint customers. The partnership includes combined marketing and sales efforts. Vontu has been rumored to be in acquisition talks with Symantec.

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