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FireEye Inc. (Nasdaq: FEYE) stock is up more than 34% today (Friday) after inking one of the largest U.S. cybersecurity deals to date.
Milpitas, Calif.-based global network security firm FireEye – which helps companies detect and stop persistent attacks – announced late Thursday it will buy privately held forensic firm Mandiant in a $1.05 billion deal.
The Alexandria, Va.-headquartered Mandiant is best known for identifying the Chinese military last year in the hacking of 115 American companies and businesses (an accusation Beijing denied).
FireEye will use stock and options, worth some $939 million, and cash to complete the deal. FireEye said the acquisition will be immediately accretive to earnings and anticipates combined revenue to double this year.
"My aim is to create the strongest security company in the world," FireEye Chief Executive Officer Dave DeWalt, best known for revamping antivirus firm McAfee in preparation for a $7.68 billion sale to Intel (Nasdaq: INTC) in 2010, told Reuters. "They have these very strong Navy 'cyber' Seals who respond to breaches and are very good at what they do," added DeWalt, who previously served as chairman of Mandiant's board.
DeWalt said FireEye and Mandiant are the forefront of a new generation of cybersecurity protection that will replace antiquated antivirus models. The synergies will likely change the cybersecurity landscape.
The two businesses effectively complement each other. For example, FireEye can respond in "seconds or minutes" to an advanced threat posed by a "particularly nasty nation state attacker." It can then pass the threatening malware issue to Mandiant to access the damage and "fix it in real time."
Investors applauded the deal, sending shares of FireEye up nearly 30% in early morning trading Friday. FEYE stock is up more than 100% since going public on Sept. 19, 2013, at $20 a share.
Cybersecurity Stocks 2014: More Deals Ahead
Last year was indeed a banner year for cybersecurity deals. Nearly four dozen deals were announced in Q2 of 2013 alone, roughly 7% of all mergers and acquisitions activity, reports Ernst & Young.
That was up from 3% in the same quarter a year earlier and better than 5% for all of 2012.