RSA confirms acquisition rumors

EMC rumored suitor for security mainstay

RSA Security confirmed published rumors that it is in discussions to be acquired, but declined to reveal the companies with which it is negotiating.

The company issued a short statement Thursday in response to a New York Times article reporting that the company was in negotiations to be bought by storage vendor EMC.

"RSA Security is currently engaged in negotiations with parties regarding a potential strategic transaction," the statement said. "No definitive agreement has been reached."

The Times article, which appeared on Thursday, said that RSA was near a deal with EMC worth $1.8 billion, but that other companies may be in the running. RSA's board was reported to be meeting Thursday or Friday to review final bids for the company.

In its statement, RSA cautioned that it was possible that no agreement would be reached to sell the company, or that the company's board of directors could reject the offer. RSA would not make any announcements until the board had approved a deal and entered into a definitive agreement to acquire RSA, the statement said.

Founded in 1986 by encryption luminaries Ronald Rivest, Adi Shamir, and Leonard Adelman, RSA is best known as an early proponent of the use of public key cryptography and as a maker of strong authentication technology such as smart cards and the popular SecurID tokens, which generate one-time passwords that are combined with traditional user names and passwords to provide stronger login security.

The company also sells Web access management and federated identity technology, as well as BSAFE, an encryption technology for business applications.

More recently, RSA has moved into the consumer authentication market aggressively, buying anti-fraud technology company Cyota for $145 million in December and lightweight authentication vendor PassMark for $44 million in April.

EMC has been growing its stable of security products in recent months as it tries to meet the growing demand for security for stored data, and fend off competition with Symantec, which bought storage software vendor Veritas.

In May, EMC announced it was buying Kashya, a data replication company, for $153 million. In the last year, the company also snatched up rights management firm Authentica .

After struggling off and on in recent years, RSA has picked up steam with the shift to consumer authentication. In April, the company reported first quarter income of $5.3 million on revenue of $87.5 million, an increase of 16 percent in revenue from the same quarter in 2005.

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