Application security

MessageLabs silent on sale rumors

MessageLabs officials are staying mum on rumors the New York-based email security and managed services provider is on the selling block.

Ferris Research, a San Francisco-based research institute that focuses on the messaging field, published analysis Wednesday saying: "MessageLabs is looking for a buyer, and has engaged (financial firm) UBS as an investment banker. We believe the rumor to be correct."

The firm said in the report, based on a financial prospectus it obtained, that MessageLabs is sustaining strong growth. But MessageLabs, in a statement released today, declined to confirm or deny rumors it was looking to sell, instead choosing "to focus on our continued growth and expansion."

The company has sustained a 61-percent compound annual growth rate since fiscal year 2002, resulting in $92 million in revenues this fiscal year. In addition, the vendor reported an earnings before interest, taxes, depreciation and amortization (EBITDA) margin of 15 percent.

Despite the strong numbers, selling may be the best decision as MessageLabs has "not been as good at generating profits as shareholders have wished," according to Ferris Research. "Merging with another firm facilitates the generation of wealth."

Ferris added that the company is ripe for a sale because mergers and acquisitions remain hot in the information security space.

MessageLabs' statement said Ferris based its predictions on a two-page company backgrounder, apparently prepared by UBS. MessageLabs said it often contracts financial advisers to help it find ways to improve growth in new markets.

"In a hot market such as ours, there will always be rumors about mergers and acquisitions, most of which will come to nothing," the MessageLabs statement said. "As the leader in the managed security services market, we are used to a constant stream of these rumors – mostly generated by our competitors. Rather than engage in this debate, we would rather focus on our continued growth and expansion."

MessageLabs, founded in 1999, has 350 employees spanning eight countries, according to its website.

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