EMC to Acquire RSA Security

Updated from 5:26 p.m. EDT

Following reports earlier Thursday that such a deal was in the works, EMC(EMC Quote) said after the closing bell that it will acquire RSA Security(RSAS Quote) in a deal worth nearly $2.1 billion.

"This was a missing piece in our information infrastructure puzzle," EMC CEO Joe Tucci said in a conference call after the merger announcement.

Tucci had said previously that security was one of the five "$1 billion businesses" that EMC was pursuing. During the call, he said customers want security built in to EMC products.

RSA sells identity and access management technologies, encryption and key management software.

During the call, Tucci also said the company is planning to buy back some of its shares. The acquisition and the buyback will help position the company for the future and drive earnings, he said.

"We're saying publicly that we can grow this company in the mid-teens," Tucci said.

But shares of EMC were off 4.4% in recent after-hours trading, suggesting that investors were showing concern that EMC was overpaying in a large acquisition that goes against its public strategy of smaller acquisitions.

Tucci confirmed that a hot bidding war drove up the price of the acquisition.

When asked why EMC didn't just partner with RSA, Tucci said that "RSA wasn't going to be around" and that others vying for the company would not be willing to share the technology.

"This is critical technology and if you think we're the only ones that saw that, you're not listening to me," Tucci said.

He said the move was in the best interest of shareholders: "We will not let you down."

The companies announced late Thursday that EMC will pay $28 for each RSA Security shares and will assume outstanding options. The $2.1 billion price tag excludes RSA's existing cash balance.