SAN JOSE, Calif. – Extending its technology portfolio into security, Rambus Inc. has bid to acquire Cryptography Research, Inc. for $342.5 million in cash and stock. Rambus expects the deal to close this summer.
CRI develops and licenses chip security technology in areas including content protection, network security, anti-counterfeiting and financial services. It has sold about $100 million in licenses to date and claims it has been profitable since its founding.
CRI's customers include Atmel, Infineon, Microsoft, NXP, Raytheon, Renesas, Samsung, STMicroelectronics, Toshiba, and Visa. Some of the same companies also license Rambus' memory technologies.
CRI's president and chief scientist, Paul Kocher, helped author the SSL 3.0 standard and define differential power analysis (DPA). CRI licenses technology to prevent DPA, a technique for hacking into systems by monitoring their power consumption. CRI also sells CryptoFirewall, a silicon security block used for a range of applications including pay TV services.
"Rambus will provide our team the perfect home to continue development of technology which addresses an increasingly complex range of security requirements,” said Kocher.
“The addition of CRI’s world-class security technology is a pivotal step in our strategy to extend our IP leadership and aggressively drive our revenue growth,” said Harold Hughes, chief executive of Rambus.
The move marks another step in the move by Rambus to diversify into developing and licensing a broadening range of electronics technologies. In late 2009, Rambus acquired and now licenses lighting and display technologies.
The acquisition is comprised of $167.5 million in cash, approximately 6.4 million shares of Rambus stock, and $50 million payable to CRI employees in cash or stock over three years. Rambus has extended offers to hire 30 CRI employees and estimates that this acquisition will be accretive on a pro forma basis in 2013.
The boards of directors of both companies and a majority of the shareholders of CRI have approved the acquisition. The deal is a large one for Rambus which estimates it has about $500 million in cash and faces a number of IP court battles.
At least one analyst complained the acquisition cost was "somewhat steep" at three times CRI's revenues. In February, Intel closed its $7.68 billion deal to acquire McAffee to bolster its security and software business.