FireEye buys Mandiant for US$ 1 billion to counter growing cyber threat

News by Steve Gold

FireEye taps its IPO cash pile to acquire data forensics specialist.

Two of the industry's largest and high-profile security vendors - FireEye and Mandiant - have closed an acquisition deal with the former paying more than $1 billion in stocks and cash to Mandiant's shareholders. The deal will see the companies focus on offering real-time intrusion detection, contextual threat intelligence and rapid incident response.

Both companies were founded back in 2004, and have become prominent players in the cyber security space in recent times.

FireEye, which has been more than 1,000 staff, generated just under US$ 160 million last year in revenues and filed a US$ 225 million IPO route last September.  It is targeting 50 percent growth in 2014, fuelled mainly by the effects of this new acquisition.

Mandiant, meanwhile, is a private VC-funded company with 300 staff and generates sales of more than US$ 100 million a year.

FireEye's main claim to fame its virtual container approach to security, allowing code and other threats to be assessed as a threat within a sandbox environment, while Mandiant is perhaps best known for its leading-edge research, in particular its February 2013 report, in which it analysed the complex Chinese security threat, even tracing the attack vectors to their source. The company also produces a range of security forensics products for corporate establishments.

As part of the deal, founder Kevin Mandia, a former USAF cyber-forensics investigator, becomes FireEye's COO. Back in 2004 he quickly made a name for his company by offering automated security investigation software that allowed IT staff to better investigate their data security problems and breaches. spoke to FireEye chairman Dave DeWalt today, shortly after the deal was announced.

DeWalt, who previously held the same position with McAfee until the anti-virus software maker was sold to Intel in 2010, said that the US$ 106.5 million cash part of the deal comes from the IPO pool from last September - effectively from FireEye's balance sheet, he added.

Interestingly, the FireEye chairman does not see any channel or distribution conflict between the two companies, following a two-year partnership that led to the integration of the firms' security offerings last February.

"Our client focus is actually quite similar. Most of our sales are in the Fortune 500 sector, whilst Mandiant also sells into this enterprise sector, as well as smaller companies,” he told

“The deal gives us access to a suite of good end point products - including end point security offerings that can be installed on the desktop for smaller companies - so we are both excited about this arrangement.”

DeWalt said that the gestation period for the deal was around two years, and started when both companies began their partnership - it really started rolling, he says, when both firms announced the integration of their security products at the RSA Security event in February of last year.

"It was at that stage that our two companies really started to come together. Mandiant were considering an IPO, but they decided this acquisition deal was a better option for the shareholders, and now the deal has closed," he explained.

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