Qinetiq to acquire Cyveillance for $40 million

Published 8 May 2009

Among the major winners of the administration’s 2010 defense budget will be defense contractors involved in cyber security, intelligence, surveillance and reconnaissance; Qinetiq North America positions itself to benefit from the shift in the defense budget’s priorities by acquiring cyberspace intelligence specialist Cyveillance

We wrote the other day that the proposed Obama administration’s 2010 defense budget would create winners and losers. Among the major winners will be defense contractors involved in cyber security, intelligence, surveillance and reconnaissance. Defense contractors have anticipated this, and one of the largest contractors, Qinetiq North America, wants to be ready. Qinetiq will acquire Arlington, Virginia-based Cyveillance (the company describes itself as “The world leader in cyber intelligence”), a provider of online monitoring technology that identifies and tracks data in cyberspace, for $40 million. There will be potential further consideration of up to a maximum of $40 million depending on the company’s financial performance during a two-year period ending on 31 December 2010.

Cyveillance is a company with 75 employees that has been backed by venture-capital fund partners including Lazard Technology Partners, ABS Capital Partners, New Enterprise Associates, and Black Rock. The company develops and operates online monitoring technology for a range of commercial customers on multi-year subscription fee contracts. In the year to 31 December 2008, Cyveillance generated revenues of $10.4 million and recognized an operating loss of $1.6 million. Gross assets of the company were $5.3 million.

Under terms of the agreement, pending regulatory approval, Cyveillance will become a Qinetiq North America subsidiary. The acquisition is expected to close in June 2009.