Belden Inc, an American manufacturer of networking and cabling products, has recently announced its acquisition of Tripwire, Inc for $710 million, a deal which provides exciting new opportunities for both parties.
Tripwire has accelerated its growth in recent years. Since 2011, it has tripled its Earnings Before Interest, Taxation, Depreciation and Amortization (EBITDA) margin to above 30%, with growth rates now estimated in the high teens—about twice that since private equity shop Thomas Bravo acquired the company a few years ago.
It is in light of this growth that Belden has acquired Tripwire at nearly 5x sales, according to a report written by 451 Research. For perspective, Thomas Bravo purchased the company at 2x sales in 2011 for $225 million, signifying that Tripwire has nearly tripled its overall price in just three years.
Belden has taken note of this success. Rather than tamper with Tripwire’s growth, it has instead sought to facilitate it by increasing the company’s R&D budgets. Additional R&D resources, according to an Enterprise Management Associates analysis, will allow the company to keep its current business while simultaneously allowing it to expand into additional markets.
Tripwire’s products, including its popular File Integrity Manager (FIM) and its IP360 risk assessment solution, are all currently designed with enterprises in mind. Given Belden’s activities in the oil, gas, power, big pharma, broadcasting, and automotive markets, this list of products could expand.
Last year, both Tripwire and Belden hinted at this possibility when they jointly announced a new marketing initiative to improve critical infrastructure cybersecurity in manufacturing organizations. Now with the acquisition confirmed, Tripwire might add a new line of SCADA-system products, with Belden expected to begin incorporating the company’s FIM solution into its products in the near future.
Ultimately, Belden’s acquisition of Tripwire is a win-win for both parties. Belden should gain a market edge over competitors once it has created a new line of hybrid products that incorporate Tripwire’s solutions, and Tripwire should keep its current business and expand into additional markets.
For Belden and Tripwire, the future looks bright.