Sourcefire CEO: I hope common sense will prevail
Wayne Jackson on the acquisition by Check Point: I find it hard to imagine anything that would justify suspending this deal.
Ran Dagoni, Washington 5 Mar 06 17:19
“People forget that Check Point Software Technologies Ltd. (Nasdaq: CHKP) isn’t a government company, but a public company. Its management includes American citizens, as are some of its shareholders,” Sourcefire CEO Wayne Jackson told “Globes” in an interview.
Check Point, run by chairman and CEO Gil Shwed, wants to acquire Sourcefire for $225 million, but the US administration is conducting an in-depth examination of the deal. The Committee on Foreign Investment in the US (CFIUS), which examines whether investments by foreign companies are liable to harm US security, announced that it was opening a 45-day inquiry into the deal, longer than the usual 30-day check.
Possible objections by the Bush administration to the deal is mainly because Sourcefire develops and markets Snort open source intrusion prevention and detection technology, whose users include the US Department of Defense, military, and intelligence agencies.
Jackson said he believes that the CFIUS investigation would not lead to the cancellation of the Check Point deal. He does not think that Check Point is a proper target for opponents of the deal, if only because the Israeli government is not a party to it. “The investigation could theoretically lead to the cancellation of the deal, but I’m optimistic, and hope that common sense will prevail,” he said. “After all, this deal will greatly benefit both companies.”
“Globes”: Check Point and Sourcefire representatives are participating in CFIUS discussions, in an effort to allay administration fears. What is the mood at the meetings?
Jackson: “It’s not easy to work with CFIUS, and I prefer discretion.”
Jackson says Sourcefire is convinced that it has answers to all of the regulators’ reservations. “No one mentions that Snort is an open code. Anyone can use the software, and 20 million users are doing just that. We don’t intervene in Check Point’s technology. We’re transferring control. An arrangement can be reached on all problems raised by CFIUS.
“None of our products are subject to the government agency for defense exports (which has the authority to cancel the sale of goods or technologies to foreign countries out of security considerations - R.D.). We can sell our products anywhere in the world, even to China, which is why this affair astonishes us. I find it hard to imagine anything that would justify suspending this deal.”
What else can you do?
“We can do nothing but honestly work, together with Check Point, with CFIUS.”
In your opinion, are there external reasons, i.e. the administration’s settling of accounts with Israel for arms sales to China, underlying the investigation?
“I can imagine - and this is entirely speculative - that the administration’s displeasure about Israeli exports of arms technologies is at the core of the matter. If that’s the reason, no one is telling us.”
Is it possible to separate your civilian and military functions, so that only the civilian part is sold to Check Point, as a possible solution to CFIUS’s demands? Defense journals have had reports to this effect.
“Such a separation is impossible. We produce and sell commercial products, including Snort, which are used by both government and private bodies without distinction. Separation is impossible. We don’t sell separately to the government; and we’re continuing to serve federal customers during the inquiry.”
Published by Globes [online], Israel business news - www.globes.co.il - on March 5, 2006