Tumbleweed Acquired in Friendly Merger

New company to combine security services, business process modeling, B2B services

Axway, the U.S. subsidiary of Paris-based Sopra Group, will purchase Tumbleweed Communications in what the two companies billed as a “friendly” merger.

The new security company will have a new name -- which has not yet been made public -- and revenues of around $270 million, according to Axway, which is offering $2.70 per share for all of Tumbleweed's stock. The transaction is expected to close in the third quarter, pending regulatory approvals as well as the approval of Tumbleweed stockholders.

Redwood City, Calif.-based Tumbleweed, best known for its file transfer and email security software and appliances, reported revenues of $57 million in fiscal 2007, while Scottsdale, Ariz.-based Axway reported revenues of $218 million last year.

Why the merger? “We wanted to be the dominant leader in the managed file transfer space, secure content delivery,” says Joe Fisher, executive vice president of product management for Tumbleweed. “The core assets Axway brings augment our managed file transfer [business] nicely, [such as] business process modeling. And they offer a [software as a service] model, and we offer appliances and software – those are complementary pieces there.”

Axway, meanwhile, was looking to make more inroads into the U.S. market, as well as to add security appliances and software to its portfolio of products, according to Dave Bennett, CTO of Axway, which offers B2B integration and business process modeling services.

Industry experts say Tumbleweed was struggling in the already-crowded email security space. But Tumbleweed’s Fisher says the merger was a fit for Tumbleweed’s strategic plans and there are no plans to phase out any Tumbleweed products at this time. “It is in line with where we are going. It’s not a student-body left or student-body right [move] in strategy,” he says.

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  • Tumbleweed Communications Corp. (Nasdaq: TMWD)