No 'For Sale' Sign ... Yet

MessageLabs disputes a rumor that it's on the block, but Ferris Research swears something's up

Dark Reading Staff, Dark Reading

July 27, 2006

2 Min Read

4:10 PM -- This morning's breathless bulletin from Ferris Research stoked the rumor that managed messaging and Web security services provider MessageLabs is on the block. The consulting firm said MessageLabs has secured UBS as its investment bank to help "shop themselves around."

Richi Jennings, lead analyst for the email security practice at Ferris, told Dark Reading that the timing is right for such a deal. "This whole area of messaging security area has had a lot of M&A activity for some time." And Ferris' take is that MessageLabs, a privately held company, isn't doing as well marketshare-wise as it would like, he said.

But not so fast. MessageLabs says no way on the M&A.

Ferris apparently got its hands on a document it called a prospectus, but it's nothing more than basic company info, according to MessageLabs. "What I can tell you is that the confidential document that Ferris appears to have received surreptitiously is a standard investment bank two-page company backgrounder that highlights our size, growth, and profitability," a MessageLabs spokesperson later said. "As a high-growth company in a rapidly expanding market, MessageLabs is considering additional funding to help us accelerate growth in new markets and we are working with our financial advisors on this."

And look out. The paper trail may well lead to one of MessageLabs' competitors. "We're disappointed that Ferris chose to run with a speculative story, that we believe was largely generated by a competitor of ours, without calling us for comment," the spokesperson said.

But MessageLabs' dispute of the report certainly didn't dampen Jennings' enthusiasm about the prospect of a MessageLabs sale. Ferris doesn't have any information on potential suitors for MessageLabs, Jennings told me, but he did speculate that Sprint, for example, could be a fit. Sprint had been a customer of FrontBridge, the email security company Microsoft purchased earlier this year. "Sprint could strategically invest in MessageLabs if it didn't want a relationship with Microsoft," Jennings said.

Okay, so no hot summer M&A story today. But then again, it depends on how you read MessageLabs' statements: They didn't actually say "never" to a future M&A prospect. "Rather than engage in this debate we would rather focus on our continued growth and expansion," the MessageLabs' spokesperson said.

A non-denial denial or just corporate coyness? Stay tuned.

— Kelly Jackson Higgins, Senior Editor, Dark Reading

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Dark Reading Staff

Dark Reading

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