In a bid to strengthen its business-to-business electronic commerce capabilities,
announced Monday that it was acquiring two privately held software companies,
, for a total of more than $1.4 billion.
VeriSign shares shot up to close Monday trading at 150 1/8, up 19 3/16 or 15%. The stock is up more than tenfold in the last 12 months.
VeriSign provides security services on the Internet to Web sites, enterprises and e-commerce service providers. Thawte is a competitor to the Mountain View, Calif.-based company in one aspect of that business, the manufacture of digital certificates. The $575 million all-stock purchase of South Africa's Thawte will enhance VeriSign capability in that business. Digital certificates are electronic security cards that identify individuals and Web sites.
The purchase of Redwood Shores, Calif.-based Signio is valued at $840.7 million based on the company's closing stock price Monday; VeriSign will issue approximately 5.6 million shares of stock for all of Signio's shares. This move marks VeriSign's entry into the payment-services business, which connect online merchants, business to business exchanges, payment processors and financial institutions on the Internet.
In a logical extension of its infrastructure, VeriSign can now offer payment services, as well as identification. "The payment and authentication businesses really go hand in hand, so this is a natural fit," Philippe Courtot, chairman and chief executive of Signio, said in an interview. "The market and our customers want both services so we are answering their needs."
He added that there is huge demand for both of these services in the business-to-business market. "The business is there for the taking," Courtot said. "We have the momentum and with VeriSign we will continue to have that momentum." They will focus on the business-to-consumer market too but "there is significantly more money in the business-to-business market," he explained.
Despite investor excitement over the deals, analyst John Puricelli of
cautioned: "I think it's a little excessive. There's not much in the way of an increase in revenues for at least 12 months." Puricelli rates VeriSign a buy-aggressive and his firm has not done any underwriting for the company.