Eye on M&A

VeriSign restructuring close to finish line

Move intended to raise cash, sharpen focus on core business

The October sale of VeriSign Inc.’s Global Security Consulting Services business unit was the latest move in the restructuring plan started two years ago by the information technology security company.

The plan, announced in 2007, is intended to raise some cash — analysts estimate the sale of about 13 units when complete will yield about $750 million — and let the company concentrate on those markets where it excels: identity and authentication services, online security, domain name services, and Internet infrastructure.

Recent assets that VeriSign has sold, according to the company’s annual financial statements, include:

  • August 2009: Messaging business to mobile specialist Syniverse for $175 million.
  • July 2009: Managed Security Services to SecureWorks Inc. for an estimated $45 million.
  • May 2009: Real-Time Publisher Services business to Paul Farrell Investor Group for an undisclosed amount.
  • March 2009: Communication Services Group to TNS Inc. for $230 million.
  • February 2009: EMEA Mobile Media, including 3united Mobile Solutions, to Sinon Invest Holding for $7.8 million.
  • December 2008: Post-pay business to wireless telecommunications carriers for $28.3 million.
  • October 2008: Minority interest in mobile content provider Jamba/Jamster Joint Ventures to News Corp. for $199.4 million.
  • October 2008: Communications Consulting business, including the inCode Telecom Group business, for $700,000.
  • April 2008: Digital Brand Management Services business to Melbourne IT for $50.4 million.
  • April 2008: Content Delivery Network business, including Kontiki video content technology, to MK Capital for $1 million.
  • March 2008: Self-Care and Analytics business, including CallVision, to Globys for $14.2 million.
  • December 2007: Retail Data Solutions business for $10.2 million.
  • September 2007: Jamba Service insurance business for $12.8 million.
  • January 2007: Controlling interest in Jamba/Jamster to News Corp. for $192 million.

And VeriSign is looking to unload more business. According to the company's Securities and Exchange Commission filings submitted in March, VeriSign plans to sell its Enterprise Security Services, which offers IT security solution design, deployment and management. The division includes iDefense Security Intelligence Services, Intelligent Content Portal Services and International Clearing business.

The last big unit remaining on the auction block is VeriSign’s mobile channel enabler, the M-Qube unit. After its sale, VeriSign would have sold various units for a total of $750 million. But that still puts the company behind financially, said Thomas Rasmussen of 451 Group. “Although we have to give the Mountain View, California-based Internet infrastructure services provider credit for successfully divesting nine large units of its business in about a year during the worst economic period in decades, we nonetheless can’t help but note that the vendor came out deeply underwater on its holdings.”

Between 2004 and 2006, VeriSign paid close to $1.3 billion for the approximately 20 businesses that comprise recent sales, he said.

However, the strategy might be paying off. In September, VeriSign won a sole-source award from the Health and Human Services Department to provide managed public-key infrastructure and digital certificate services for the Nationwide Health Information Network. VeriSign was the only provider deemed capable of supplying all the required services for secure, encrypted transmission of electronic medical data on the network, HHS said.

About the Author

Sami Lais is a special contributor to Washington Technology.

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