EMC to Acquire RSA Security

Shares of RSA, which closed the regular session up $3.52, or 18.1%, to $22.88, rose another 19.1% in recent after-hours trading to $27.25.

The acquisition is expected to be completed late in the third quarter or early in the fourth quarter of 2006, subject to customary closing conditions and regulatory approvals. The deal requires approval from RSA shareholders.

EMC expects the acquisition will hurt 2007 earnings by 3 cents a share and won't have a material impact in 2008.

On a non-GAAP basis, which excludes the impact of intangible amortization and stock option expense, EMC expects the acquisition won't materially effect earnings in 2007 and will add 3 cents a share to earnings in 2008.

Upon completion of the acquisition, RSA CEO Art Coviello will become an executive vice president and president of what will now be EMC's Information Security Division.

"You don't win in technology spending all of your money buying back shares," Coviello said. "You only win in technology by growing, and I think we'll we able to add to that growth rate."

RSA's stock options practices have been under scrutiny by the Securities and Exchange Commission and the company has been subpoenaed by the Department of Justice. EMC executives said they were comfortable with RSA's response to the probe.