ANN ARBOR ? A former University of Michigan start-up company, Arbor Networks, has agreed to be acquired by a Texas-based network service provider, the companies announced Monday. Terms of the acquisition, expected to close next month, were not disclosed.

Cyber Security expert Richard Stiennon, in his eNewsletter Cyber Defense Weekly, said the netflow analysis and Directed Denial of Service defense company, Arbor Networks, has a large overlap with Tektronics Communications?customer base in the carrier space.

He also said based on Arbor Networks’ $80 million annual revenues, with a 2.5 multiple for acquisition, the deal will cost Tektronics about $200 million.

“According to a conversation I had with Colin Doherty, CEO of Arbor Networks and Rich McBee, Senior Vice President and General Manager at Tektronix Communications, the value is in introducing Arbor’s technology to the wireless carrier space that Tek is strong in.

“I have long held that security sells and that non-security vendors in the networking and computing space would make security acquisitions in order to expand into a growth market, and reap the benefit to their brands by being associated with good security technology,” Stiennon wrote. “You can see evidence in this by the recent acquisition of Narus by Boeing, TippingPoint/3com by HP, and Dell’s partnership with Juniper/Secureworks.”

Stiennon said according to McBee and Doherty, Arbor will stay a stand-alone business unit, preserving its brand and engineering teams. This is a positive event for Arbor, enhances Tek’s brand and reach, and will help further the battle against cyber attacks.

Arbor Networks, founded by U-M engineering professor Farnam Jahanian and then-doctoral student Rob Malan in 2000, is a major source of network security services.

The company, whose security software monitors traffic on more than 70 percent of the world’s Internet service providers, is based in Massachusetts. But the firm had 72 employees locally when it signed a 7-year lease for a 22,000-square-foot office at the South State Commons complex in Ann Arbor two years ago, Ann Arbor Business Review reports.

A recent expansion announced by Arbor Networks was tied to a $193,200 tax abatement distributed by the city of Ann Arbor and a 10-year, $1.5 million tax credit awarded to the company by the Michigan Economic Development Corp.’s Michigan Economic Growth Authority board.

“Arbor Networks is ideally positioned to continue on its growth path by protecting the availability of networks and services around the world as the size, complexity and frequency of network security threats continues to grow,” said Rich McBee, Danaher Group Executive, in a prepared statement. “Arbor Networks expands our portfolio of leading companies in the communications and enterprise markets. The addition of their superior solutions allows us to offer our fixed-line, mobile, converged/IP and enterprise customers solutions to deploy, measure, monitor and secure their networks.”

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