» Topic:  U.S. Government Investigates Check Point-Sourcefire Deal

» Added by:  Paul F. Roberts

» Date:  3.3.2006

  The U.S. federal government agency at the center of a political controversy over foreign management of U.S. ports is scrutinizing a deal by Israeli company Check Point Software Technologies to acquire Sourcefire.

Check Point, of Redwood City, Calif., notified investors in February that its planned acquisition of Sourcefire was being investigated by the Committee on Foreign Investment in the United States, CFIUS, a U.S. inter-agency committee that is chaired by the U.S. Treasury.

The agency has elected to conduct a 45-day examination of the acquisition to satisfy national security concerns, according to a Check Point statement dated Feb. 13.

Both Check Point and Sourcefire declined requests to discuss the matter, citing the ongoing inquiry.

CFIUS is the same agency that, in January, approved the sale of The Peninsular and Oriental Steam Navigation Company (P&O) to Dubai Ports World, a state-owned company based in the United Arab Emirates.

That decision has spawned a political firestorm in Washington, D.C., over what are perceived to be national security risks stemming from foreign management of U.S. ports.

Check Point, which has dual headquarters in Ramat Gan, Israel, and Redwood City, Calif., was a software security pioneer with its network firewall and VPN technology.

In October, Check Point said it intended to buy Sourcefire, which sells the popular Snort IPS (intrusion prevention system) technology for around $225 million.

The deal was expected to close by the first quarter, 2006, but Check Point notified the SEC in February that the deal was on hold pending approval under the 1988 Exon-Florio provision of the Defense Production Act of 1950, which gives the president the ability to suspend or prohibit a foreign acquisition, merger or takeover of a U.S. corporation that threatens national security.

Sourcefire's Snort IPS product is used throughout the world, and is used extensively by U.S. government. According to a published report, both the FBI and Department of Defense objected to the sale of the Sourcefire technology to an Israeli company.

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