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Certicom acquires Uptronics

The cryptography firm will pay $2.5 million in cash and stock to add security consulting to its businesses.

Crypto company Certicom today announced its second acquisition in four months, buying Uptronics in a $2.5 million deal that gives Certicom an instant security consulting practice.

Certicom, which specializes in elliptic curve encryption algorithms used for scrambling data on small-memory devices, paid $450,000 cash and issued 215,672 new shares to acquire Uptronics. Certicom's stock trades on the Toronto Stock Exchange under the symbol CIC, closing recently around $9. The deal is scheduled to close on Tuesday.

Uptronics, which specializes in cryptography and security services, will help Certicom customers get their products to market faster, spokesman David Krane said.

"As an OEM company, it's critical for us to add this new layer of support and services," Krane said. "It's a timing issue. We're specialists in cryptography, and now we're adding product development." That's important to the company because much of its revenue comes from royalties on products that use its cryptography.

Certicom's elliptic curve algorithms have gained some customers because they require less computing power to process than ciphers from RSA Data Security, which dominates the encryption business. That makes them especially attractive for use in smart cards, mobile phones, or Internet appliances. Early this year RSA announced it will support elliptic curve in its software tools too.

Many security technology firms have added services or outsourcing to their hardware and software offerings this year, in part because security professionals are in short supply and in part because security policies can be complex to set up and manage.

Among those with a new services bent: Network Associates, Cisco Systems, Axent, and Secure Computing.

On July 20, Certicom acquired Consensus Development and its flagship SSL toolkit, called SSL PlusTM, for $24.5 million. The tools help build applications that utilize the Secure Sockets Layer protocol, widely used to secure Internet communications and transactions.

Privately held Uptronics, a 5-year-old firm based in Sunnyvale, California, counts among its customers government agencies, major corporations, and software developers. It had about 10 employees, boosting Certicom's total to 105, split evenly between California and Toronto.