Sourcefire's CEONo reason to cancel Check Point deal

Published 6 March 2006

The firestorm over the port management deal involving a Dubai-based company has drawn attention to other deals involving foreign companies bent on acquiring U.S. companies with defense or homeland security contracts. As we reported Friday [see HSDW 3/3/06], such is the case with Israeli company Check Point’s plan to acquire Columbia, Maryland-based Sourcefire, an IT security specialist with intimate involvement with many U.S. security agencies. The FBI and other elements in the U.S. national security establishment have been uncomfortable with the deal from the start, and have been pressuring the Committee on Foreign Investment in the United States (CFIUS) to reject the $255 million deal.

Sourcefire CEO Wayne Jackson says that he hopes common sense will prevail. “I find it hard to imagine anything that would justify suspending this deal,” he told Globes. “People forget that Check Point Software Technologies (Nasdaq: CHKP) isn’t a government company, but a public company. Its management includes American citizens, as are some of its shareholders,” Jackson said in an interview. This may well be the case, but CFIUS has announced that it was opening a 45-day inquiry into the deal, longer than the usual 30-day check. The sensitivity in U.S. national security circles stems for the fact that Sourcefire develops and markets Snort open-source intrusion prevention and detection technology, the users of which include the U.S. Department of Defense, military, and intelligence agencies.

Jackson says Sourcefire has answers to all of the regulators’ reservations. “No one mentions that Snort is an open code. Anyone can use the software, and 20 million users are doing just that. We aren’t transferring technology to Check Point. We’re transferring control. An arrangement can be reached on all problems raised by CFIUS,” he said, and adds: “None of our products are subject to the government agency for defense exports… We can sell our products anywhere in the world, even to China . . .”

Globes also asked Jackson about the possibility of separating Sourcefire’s civilian and military functions, so that only the civilian part is sold to Check Point, as a possible solution to CFIUS’s demands? “Such a separation is impossible,” Jackson said. “We produce and sell commercial products, including Snort, which are used by both government and private bodies without distinction. Separation is impossible. We don’t sell separately to the government; and we’re continuing to serve federal customers during the inquiry.”

-read more in Ran Dagoni’s Globes interview with Jackson