Computer Associates announced today that it had bought Israeli company Security-7, as was originally reported in "Globes". CA did not disclose the price, but it has been learnt that it amounts to $19 million. CA will pay only $7 million in cash to Security-7, and the remaining sum will be paid over two years, provided Security-7 meets the landmarks set by CA.
The purchase sum is close to the valuation Security-7 received at its second capital raising round about a year ago. Security-7 then proceeded to raise $2.5 million in a third round of capital raising.
It was further learnt that Security-7 shut down its US operations, and laid off all its staff there. The company also dismissed a number of employees at its Yokne’am based development center. It was also learnt that Security-7 ran into substantial difficulties in marketing its software, and that bugs were discovered in many of its products following installation. Security-7 said it was unable to comment at this point.
Security-7 develops information security solutions. An approved enterprise, Security-7 was founded in 1996 by Asher Jospe and Doron Elgressy. Its products deliver solutions for the problem of "hostile applets" - planned attacks through security loopholes in languages such as Microsoft’s Active-X and Sun’s Java, which are used to write Internet applets.
Overall investment in Security-7 so far amounts to about $10 million. An $800,000 preliminary investment was made by private investors at the seed stage. In August 1997 the company raised $2 million from the Oppenheimer Fund (Genesis) and the Boston Bank’s venture capital fund.
The second round of capital raising, completed in June 1998, brought in $4.8 million from the institutional shareholders that re-invested in the company. They were joined by the Yozma Fund and Benny Steinmetz. Security-7’s value following this capital raising round was estimated to be $15 million. In January of this year, the company raised $2.5 million from Oppenheimer and the Genesis Fund, the Boston Bank and private investors.
Security-7’s major shareholders are: Doron Elgressy - 16.4%, Asher Jospe - about 23% (and perhaps even more, through various holding companies), Genesis - 13.6%, Yozma - 7%, Boston Bank - 14%, Tunix Management - 5%, and Uebersee Bank - 6%. The remaining shares are owned by private investors and staff.
Published by Israel's Business Arena July 1, 1999