Raytheon, an arms manufacturer, will buy Austin-based cyber security company Websense from private equity firm Vista Equity Partners for $1.9 billion, including debt.
Raytheon, a popular military defense system maker, will invest around 1.6 billion to gain a majority stake of the company. It has been found that companies are investing in cyber security, especially after the security breaches in Sony, Sears and Target.
The new company will be headed by Websense CEO John McCormack, and will be a separate business unit of Raytheon.
Vista Partners bought Websense a couple of years ago for $990 million. The headquarters of the new company will stay in Austin, Texas, according to Business Insider.
"We're excited that Raytheon has decided to Websense's corporate HQ here in Austin; this is our home and we're here and looking to grow here," Websense C.F.O. Jim Hagan said.
It has been understood that Vista Partners will also invest about $335 million to acquire a minority stake in the company.The new company, including Raytheon's cyber products operations and Vista's Websense operations will provide defense-grade cyber security solutions for commercial companies, according to Kxan.
Raytheon Chairman and CEO Thomas A. Kennedy has stated that sophisticated threats created by affluently-funded, nation-state adversaries and criminal groups are driving the growth of cybersecurity industry.
Websense's TRITON, a cybersecurity product, is used by more than 11,000 enterprises, according to the company's website.
Meanwhile, analysts believe that the demand for cybersecurity products will increase with the growing hacking incidents occurring in both private and government organizations. The deal is also expected to heighten the interest of investors in cybersecurity domain.
"This deal speaks to the growing importance of cyber security to protect enterprises, as well as government assets, from malicious activity and state attacks," FBR Capital Markets analyst Daniel Ives wrote in a note.
Minority stakeholder Vista Partners will keep 19.7 percent ownership in the new company. The final deal will take place in the second quarter of 2015.