Missile maker Raytheon spends $1.9 billion on joint venture to build "defense-grade solutions" that help companies protect themselves against hacks.
Companies trying to defend themselves from data hacks could soon be calling on a joint venture between defense contractor Raytheon and security software company Websense.
Raytheon will pay $1.9 billion to retain an 80.3 percent ownership in a new joint venture with Websense that will provide "defense-grade" cybersecurity technologies to companies that could fall victim to cyberattacks, the companies announced on Monday. The deal will see Raytheon acquire Websense from its current owner, private equity firm Vista Equity. After the new company is formed, Vista Equity will invest $335 million to give the company a 19.7 percent equity stake in the joint venture. That sum will be netted against Raytheon's $1.9 billion investment, bringing its total cash outlay to $1.57 billion.
The joint venture will be headed up by current Websense CEO John McCormack, who said on Monday that the new business will help the companies to "serve customers as they manage the emerging and long-term cyber threat environment."
The partnership comes at a crucial time for firms seeking more security. Over the last several years, cybersecurity threats have hit a fever pitch, with malicious hackers all over the world targeting companies to steal sensitive employee and customer data.
Major hacks reported over the last year include those on retail giant Target -- in which hackers stole credit card data for more than 110 million customers -- as well as on department store Neiman Marcus, restaurant chain P.F. Chang's, crafts-supplies chain Michaels Stores, hardware chain Home Depot, office-supplies chain Staples and insurance provider Anthem.
One of the most notable breaches was last November's incursion at Sony Pictures, which revealed private e-mails among Sony executives and inside details on upcoming films. The hack is believed to have been politically motivated in reaction to the impending release of "The Interview," a comedy that featured an assassination plot on North Korea leader Kim Jong-un. The FBI has said that North Korea was behind the attack, but the country has denied any involvement.
There were more than 1,500 data breaches worldwide last year, up nearly 50 percent from 2013.
The rash of attacks has not only prompted concern among consumers who fear that companies have little to no ability to protect themselves, but also among lawmakers. Earlier this month, President Barack Obama signed an executive order that allows his cabinet to impose sanctions on cyberattackers hacking into the networks of US companies or government agencies. The hope, according to the president's assistant for homeland security and counterterrorism, Lisa Monaco, is to stop "malicious cyber actors" who want to hack companies for financial gain.
"Effective incident response requires the ability to increase the costs and reduce the economic benefits from malicious cyber activity," Monaco wrote in a statement. "And this means, in addition to our existing tools, we need a capability to deter and impose costs on those responsible for significant harmful cyber activity where it really hurts -- at their bottom line."
At the core of the new joint venture will be Websense's Triton platform, which provides cybersecurity protection to companies. Raytheon, which had sales of $23 billion last year and specializes in defense and security, will make available the patents and other "assets" that are part of its cyber products division.
While Raytheon generates a sizable portion of its business from government contracts, the newly formed venture will focus on companies.The firms say they will use their combined competencies to build cybersecurity features that are "advanced, defense-grade."
The companies hope to complete the acquisition in the second quarter and form the company at that time.
Neither Raytheon nor Vista Equity immediately responded to a request for comment.