HP To Buy ArcSight For $1.5 Billion

Hewlett-Packard continued on the trail to beef up its services offerings by agreeing Monday to buy security software firm ArcSight for $1.5 billion.

The acquisition wasn't entirely a secret, as ArcSight's stock had soared 70% in recent weeks as rumors surfaced that the company was talking with potential acquirers that were thought to also include IBM and Oracle. There was no immediate indication that a bidding contest could develop like the one between HP and Dell for storage firm 3Par. HP won that auction for $2.4 billion earlier this month.

Both ArcSight and 3Par fit well in HP's growing enterprise services universe, where profit margins are higher than they are in its PC operation.

"From a security perspective, the perimeter of today's enterprise is porous, putting enormous pressure on clients' risk and compliance systems," Bill Veghte, HP executive VP of software and solutions, said in a statement. "The combination of HP and ArcSight will provide clients with the ability to fortify their applications, proactively monitor events, and respond to threats."

HP said ArcSight's features will meld easily with its existing security and enterprise solutions. HP and ArcSight pointed out that ArcSight can detect threats and risks by monitoring activity and state-changes in real time while providing broad visibility across internet protocol security and compliance operations. ArcSight also provides a constant feedback loop throughout different phases of enterprise activities.

HP plans to integrate ArcSight's Enterprise Threat and Risk Management Platform across its application development and operations management solutions.

"In a world where perimeter security is no longer enough, businesses need this holistic approach to secure their networks, applications, and sensitive data," said Tom Reilly, ArcSight's president and CEO.

In fitting with the recent surge of acquisition by recent large IT companies, HP is paying a big premium for ArcSight. The security firm reported revenue of $181.4 million in its latest fiscal year, which ended April 30.