Spending on security companies booming globally
The $60 billion global computer security industry has become a hot sector for a range of investors, including mainstream IT companies, aerospace, defence giants and private equity, a PricewaterhouseCoopers (PwC) analysis has reported.
According to PwC, with the exception of the recessionary year of 2009, the last three years has seen an M&A mini-boom with spending on security companies rising every year to reach record heights in 2011, which has already recorded $10.1 billion of deals. This figure was exaggerated by the huge $7.8 billion Intel paid for McAfee in February, but there have been other notable deals in the current year including the $612 million Dell paid for SecureWorks, and Raytheon’s $490 buy of Applied Signal Technology, analysts said.
The rationale for buying security companies varies from sector to sector. Defence contractors want to diversify as military spending is constrained by financial deficits in many NATO countries, while rival tech companies simply see security as a lucrative element to add to their portfolios, the report found.
Private equity and the wider investment community, meanwhile, have simply noticed the sudden interest in security companies and turned up to reap some of its rewards.
Publically-quoted security companies have also benefitted, seeing their price-earnings multiples range from the humdrum 14.1 for mature businesses such as Symantec to as much as 51 for smaller companies Fortinet and Sourcefire.
PwC sees no letup in the interest in security on the back of a predicted growth rate in spending on the industry’s products of close to 10% per annum for at least the next three to five years. Even with a possible second recession in three years, underlying trends almost guarantee this growth; security is playing catch-up against threats that have evolved more rapidly than people thought likely only half a decade ago.
“Growing threats and awareness, and changes in technology such as mobile devices and cloud computing are key drivers of spending growth in the cyber security market,” said PwC’s Barry Jaber.
- Talk about 'diversification': Oman aims to become a primary destination for Indian weddings
- What Gaza, what Syria? Ramadan full of glitz for retailers
- Going after their daily bread: is Egypt's food subsidy reform all about getting Egyptians to eat less bread?
- Overtaking Oxford Street and the Champs Elysee? Dubai's upcoming Mall of the World and what it means for the country's prospects
- The economics of Ramadan: from piety to commercialization and excessive consumption
- What an honour: Middle East defense spending to hit $920 billion by 2020, and GCC calls it 'diversification'
- UAE listed companies make highest profits in over two decades
- Saudi Arabia earns $2.5 billion per year from every dollar rise of oil prices
- MENA security market booming
- Middle East H1 M&A activities jumped 43%