Sanctum, which produces Web application security solutions, is in advanced negotiations for the sale of the company to Watchfire of Canada. It appears that the deal under discussion is a share swap that will value Sanctum at $40-50 million. The value is low compared with the $54 million invested in Sanctum in the three fund raising rounds it has conducted so far. It is possible that part of the deal may be in cash. No response to the report could be obtained from Sanctum. Watchfire is a privately owned company that provides software and services for managing online businesses. The company has its headquarters in Canada. It is active mainly in Canada, the US, and the UK. It is believed that Watchfire is not yet profitable, but that its annual revenue is higher than that of Sanctum, at some $20 million.
Sanctum has apparently been in negotiations for its sale for a long time, and was close to closing a deal with a US software company at the beginning of the year. Industry sources say Sanctum is now close to profitability, and has managed to raise its sales over the past year to more than $10 million, so that the combined company that will emerge from the sale to Watchfire will have annual sales of over $30 million.
From the point of view of Sanctum's shareholders, this will be a negative exit via sale to a private company about which there is no certainty that it will go public in the future. Sanctum's main shareholders include Sprout Group, Dell, EDS, Fidelity, Gemini Israel Funds, Mofet Tech Funds, Hitachi, Wachovia Strategic Ventures Group and Walden Israel.
Sanctum's last fund raising round was held in 2001, when it raised the large sum for that time of $30 million, at a company value of $56 million after money.
Sanctum (formerly Perfecto Technologies) was founded in 1997 by Gili Raanan and Eran Reshef. It currently has some eighty employees in its offices in Herzliya and in the US. The company's products prevent hackers from altering data stored on a website, such as product prices on an online store. The company's CEO is Peggy Weigle. Its activity in Israel is managed by vice president research and development Amit Barkan.
Published by Globes [online] - www.globes.co.il - on July 6, 2004