VeriSign Inc. (VRSN) recently announced that it would sell its Authentication Services business to Symantec Corp. (SYMC) for approximately $1.28 billion in cash.
The Authentication Services business includes Secure Sockets Layer (SSL) encryption certification services, the managed Public Key Infrastructure (PKI) platform and the company’s ownership stake in VeriSign Japan. Collectively, this business contributed approximately $101.9 million or 39% to the top-line in the March quarter.
Symantec will acquire the assets of VeriSign’s Authentication Services business, including its ownership stake in VeriSign Japan as well as certain brands and trademarks.
The transaction is expected to close in 60 to 90 days or upon receipt of regulatory approval. Following the close of this transaction, VeriSign’s remaining business will consist of its Naming Services business. This contributed approximately $162 million or 61% to the top-line in the quarter.
VeriSign plans to divert the funds received from the divestiture of these businesses to its core business – Naming Services.
In 2007, VeriSign decided to focus on its core competencies to provide highly scalable, reliable and secure Internet infrastructure services to customers around the world. Hence, by the end of 2009, the company divested a number of non-core businesses in its portfolio such as communications, billing and commerce, content delivery, messaging and enterprise security services.
VeriSign also expects to eliminate some positions once the transaction is completed. Through the sale of these non-core businesses, as well as disciplined operating management, VeriSign earlier reduced its headcount by nearly 1,000 employees.
As internet applications are increasingly being incorporated into mobile devices, we see VeriSign tapping this growth market with an array of value-added services. It remains to be seen how the streamlined company climbs up the growth trajectory and makes use of the cash received from the sale of the non-core businesses.
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