FireEye Computer Security Firm Acquires Mandiant

January 2, 2014

NICOLE PERLROTH and DAVID E. SANGER

SAN FRANCISCO — In a deal that may have broad repercussions for companies and governments fending off sophisticated hackers and state-sponsored digital attacks, FireEye, a provider of security software, has acquired Mandiant, a company known for emergency responses to computer network breaches.     

The deal, in both cash and stock, is worth more than $1 billion, based on the current value of shares in FireEye.

The acquisition, which closed on Monday but was not publicly announced until after the markets closed on Thursday, was one of the biggest security deals of 2013. It merges two darlings in the $67 billion global computer security market that together could form a formidable competitor to antivirus giants like Symantec and Intel’s McAfee.

David G. DeWalt, FireEye’s chairman and chief executive, ran McAfee before it was sold to Intel in 2010. Mr. DeWalt was rumored to be a contender for the top job at Intel, but surprised company insiders when he left to join FireEye in 2012.

Mandiant is best known for sending in emergency teams to root out attackers who have implanted software into corporate computer systems. Much of its work focused on attacks from China, and last year it made headlines with a detailed study of a hacking group known as “Comment Crew” that provided the strongest evidence yet that the hackers were closely linked to a unit of China’s People’s Liberation Army, outside Shanghai.

The combination of the two companies — one that detects attacks in a novel way, another that responds to attacks — comes as corporate America has become wary of relying on the federal government to monitor the Internet and warn of incoming attacks.

That wariness has increased since the revelations of Edward J. Snowden, the former National Security Agency contractor who removed thousands of documents before he took temporary refuge in Moscow.

The documents have made it evident to companies that the United States monitors allies as well as adversaries, including friendly governments, international organizations and the networks of some Internet companies. Some could turn to companies like FireEye and Mandiant for protection, an interesting twist since many of Mandiant’s employees come from the American intelligence world.

“After the Snowden events, in the current political climate, no one can say to the government, ‘Please, come on in and monitor our networks,’ ” said Kevin Mandia, the founder of Mandiant who will become chief operating officer of the combined company.

Mandiant is privately held, and the big winners in the acquisition will be Mr. Mandia, the company’s founder, Mr. DeWalt, who joined Mandiant’s board as chairman in 2012, and the company’s venture backers. Mandiant has raised $70 million from Kleiner Perkins Caufield & Byers, the venture capital firm, and One Equity Partners, an investment arm of JPMorgan Chase.

FireEye’s success so far has depended on a technology for detecting attacks that works quite differently from most antivirus products. Most products monitor the web and identify malicious software that has already begun to hit victims around the world.

But by the time the attack has been identified and blocked, the malicious software has already had a chance to do damage — siphoning a company’s trade secrets, erasing data or emptying a customer’s bank account.

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