--- begin forwarded text Delivered-To: clips@philodox.com Date: Fri, 7 Apr 2006 11:54:27 -0400 To: Philodox Clips List From: "R. A. Hettinga" Subject: [Clips] nCipher sees silver linings as SafeNet abandons its bid Reply-To: rah@philodox.com Sender: clips-bounces@philodox.com http://www.siliconfenbusiness.com/index.php?articleid=107 Silicon Fen Business Report One-stop news on the Cambridge High Tech Cluster nCipher sees silver linings as SafeNet abandons its bid 7th April, 2006 By a staff writer It's a back-handed compliment for a growing business to be referred to the Competition Commission. To be seen as a potential dominant force in the market and hence a threat to competition means it must be doing something right. It also has the virtue of drawing attention to the firm as an undoubted player of substance. These are the bright points that IT security specialist nCipher plc (NCH.L) seems to have drawn from the withdrawal of the recommended bid by US-based SafeNet Inc, who on 8th February offered #86m for the firm. When on 30th March, after preliminary investigations, the Office of Fair Trading referred the proposed takeover to the Competition Commission for a full UK regulatory anti-trust/competition review, it automatically triggered a lapse clause written into the terms of the offer. Today SafeNet said it will not proceed with the offer. It cited the OFT comments about the competitive position of the two companies - that the deal would bring together two of the largest suppliers of Hardware Security Modules which may lead to customers facing higher prices and a loss of innovation - and the time, cost and potential disruption to business that could ensue from a referral. In acknowledging SafeNet's decision, nCipher's directors agreed with that assessment and issued a forward looking statement explaining the broad strategy for continuing as "as an independent entity". Growth opportunities IT and Internet security - nCipher's core area of expertise - have become big issues in organisations. The Cambridge-based firm applies cryptography to the problems of identifying people and protecting their data, their businesses, and the transactions which occur between them. The nCipher Board there are "good growth opportunities" in their markets to build on the strong performance in 2005 which their growing portfolio of products and services "put us in an excellent position to exploit". It will now focus on those prospects and on further operational improvements. While the company did draw some perverse comfort from the referral to the Competition Commission, it said "the very high regard in which customers hold nCipher, its products and its after-sales service has also been emphasised to us by the consultation process". The Board intends to build on this brand loyalty and said it has the full commitment of the executive team. CEO Alex van Someren (pictured) had been due to leave following the takeover, though not co-founder and Chief Technical Officer Nicko van Someren. Share price 24% above pre-bid It remains to be seen how the stock market reacts once analysts have re-evaluated nCipher's stand-alone prospects. Given that SafeNet's offer was at a considerable premium - either 36% or 52%, depending on where you start measuring - the share price was always going to come off the 300p offered. At midday it was trading at 245p, 24% above the 197.5p of 19 January, the last day prior to the move up that triggered, five days later, the announcement by nCipher that it was in talks which could lead to an offer. That news left the price at 220.5p. nCipher expects to release results for the first quarter ended 31 March on 23 May when we should see whether the offer had an impact on trading. When releasing the full year results in late February, Mr van Someren said "uncertainty created by the SafeNet offer may have a short-term impact on revenues". Meanwhile at SafeNet SafeNet said its chief financial officer was leaving the company immediately and that it was booking costs of $600,000 for the lapsed offer in the first quarter. -- ----------------- R. A. Hettinga The Internet Bearer Underwriting Corporation http://www.ibuc.com/ 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' _______________________________________________ Clips mailing list Clips@philodox.com http://www.philodox.com/mailman/listinfo/clips --- end forwarded text -- ----------------- R. A. Hettinga The Internet Bearer Underwriting Corporation http://www.ibuc.com/ 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'