Radware Announces a Strategic Initiative to Accelerate the Growth of its Cloud Security Services Business

Acquires SecurityDAM, and expands its innovation center, cloud services division, and its cloud network footprint and capacity

Radware, a leading provider of cyber security and application delivery solutions, announced a strategic initiative to accelerate the growth of its cloud security services business. As part of this initiative, Radware will acquire the business of SecurityDAM, its DDoS scrubbing centers provider. In addition, Radware plans to grow its innovation center in India, as well as further expand its cloud network footprint and capacity, and its cloud services division, including its technology, operations, and headcount. These actions reflect the Company’s ongoing commitment to provide customers with the highest level of cyber security services and protection.

While digital transformation unlocks new opportunities for organizations, it also leaves them vulnerable and exposed to more cyber-attacks. As they seek to fill these defensive gaps and protect their assets, the demand for cloud security solutions continues to rise.

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“We are committed to providing our customers state-of-the-art, frictionless security, so they can advance their digital strategies while ensuring their defenses don’t become roadblocks to change,” said Roy Zisapel, Radware’s president and CEO. “Radware is already protecting a quarter of the Fortune 50 companies. The goal of our initiative is to innovate and scale faster, so we can deliver our cloud security capabilities to even more customers and capitalize on the growing market opportunity.”

To launch its initiative, Radware is taking several steps. This includes:

• Acquiring the assets of SecurityDAM, a related party and a cloud DDoS network operator that supplied Radware with scrubbing center services used for the provision of Radware’s Cloud DDoS Protection Service. (Additional details below.)
• Expanding its presence in Bangalore and Chennai, India, to create a larger regional innovation center. This center is chartered to drive cybersecurity research and development (R&D) and service delivery excellence across the Company’s portfolio of cloud security solutions. It augments Radware’s Tel-Aviv headquartered R&D center that addresses product innovations, such as enhanced Layer-7 flood mitigation and advanced machine-learning algorithms for auto policy optimization and false positive detection. With these investments, Radware’s cloud service unit now totals nearly 300 engineers.
• Increasing the cloud service capacity of its global delivery network to 10Tbps and extending its footprint to address evolving business demands and the growing volume of cyber attacks. In the past three months, Radware added cloud centers in Paris, France; Amsterdam, the Netherlands; and Moscow, Russia. During the next six months, the Company plans to open new and expand existing cloud security centers in major cities around the world. In the U.S., this includes San Jose, California; Dallas, Texas; and Ashburn, Virginia. Other international cities include Melbourne and Sydney, Australia; Santiago, Chile; Hong Kong, China; Tokyo, Japan; Wellington, New Zealand; Taipei, Taiwan; and Dubai, the United Arab Emirates.
• Innovating across Radware’s cloud security data center architecture to segregate between peacetime, always-on zones, and mitigation and attack zones. This advanced capability provides always-on attack detection for all customers while isolating organizations with high volume attacks to specific zones in the cloud network, so they don’t create impact to the broader group. This provides greater resiliency and service availability for always-on customers.
• Advancing our service availability and protection level with new cloud service enhancements, including:
  • A new portal for Radware’s Cloud DDoS Protection Service to improve the customer experience.
  • Enhanced DNS attack detection and prevention with new algorithms to further improve detection and minimize false positives of sophisticated DNS attacks.
  • An integrated global content delivery network service that has hundreds of cloud centers globally and is based on AWS CloudFront.

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SecurityDAM Transaction

Under the terms of the asset purchase agreement, Radware acquired SecurityDAM’s technology and operations for $30 million (subject to adjustments for intra-party balances and other deductions) with contingent payments of up to $12.5 million. The Company expects the acquisition to be accretive to earnings on a non-GAAP basis in 2023.

Yehuda Zisapel, chairman of Radware’s Board of Directors, and Roy Zisapel, Radware’s president and CEO and a member of the board, hold a majority and a minority stake, respectively, in SecurityDAM. Accordingly, the board formed a Special Committee of directors consisting solely of independent directors to examine the transaction and its alternatives and, if it determined to pursue the transaction, to negotiate and approve its terms. Based on the unanimous recommendation of the Special Committee, the purchase agreement was approved by the Audit Committee of the board and unanimously approved by disinterested members of the board.

Stifel, Nicolaus & Company, Incorporated is acting as financial advisor, and Gross & Co. is acting as legal advisor to the Special Committee. Goldfarb Seligman & Co. is acting as legal advisor to Radware.

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