MessageLabs Seeks Buyer

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From the Ferris Research weblog:

Rumor has it that MessageLabs is looking for a buyer, and has engaged UBS as investment banker. We believe the rumor to be correct.

All in all, it’s probably a good time for MessageLabs stockholders to sell:

• Generally,
  plenty of M&A interest in the malware field — think of the recent
  acquisition of BlackSpider by SurfControl, and of CipherTrust by Secure
  Computing; and less recently, of FrontBridge by Microsoft.
• MessageLabs is a leading hosted provider, with good technology and people.
• So valuations should be good.
• MessageLabs
  management has many strengths, but it’s not been as good at generating
  profits as shareholders have wished. Merging with another firm
  facilitates the generation of wealth.

The prospectus asserts:

• 61% CAGR since FY02, resulting in an estimated ₤50 million ($92 million) in FY06, with positive growth outlook.
• EBITDA margin of 15% and net income positive in FY06, projected to increase ahead of growth in sales.

One caution: It is easy to mistake the financials of the parent, MessageLabs Group,
with those of the MessageLabs business. That may make MessageLabs’
P&L look rosier. Nothing, however, that due diligence won’t
clarify. …