FireEye Buys Mandiant in $1 Billion Cyber Deal

Some 15 percent of all defense-related mergers and acquisitions today involve cybersecurity firms, according to the Brookings Institution's Peter Singer.

FireEye Inc., the California-based cybersecurity firm that went public in September, announced a deal to buy closely held Mandiant Corp. for $1 billion, the companies announced yesterday.

Shares of FireEye on Friday rose more than a third to $54.90 at 2 p.m. in Nasdaq trading as investors welcomed news of the acquisition, according to Yahoo! Finance. The transaction closed Dec. 30, according to statement from FireEye.

Mandiant, based in Alexandria, Va., sells information-security services to more than a third of the Fortune 100 companies. The company made headlines last year with a report that blamed Chinese cyber spies for stealing troves of U.S. corporation information.

“Together, the size and global reach of FireEye and Mandiant will enable us to innovate faster, create a more comprehensive solution, and deliver it to organizations around the world at a pace that is unmatched by other security vendors,” David DeWalt, chairman and chief executive officer of FireEye, said in the statement.

Mandiant will improve FireEye’s ability to thwart cyber attacks, particularly in the areas of endpoint threat detection, response and remediation products; advanced threat intelligence; and incident response and security consulting services, according to the pres release.

Kevin Mandia, Mandiant’s founder and CEO prior to the acquisition, was tapped to become senior vice president and chief operating officer of FireEye. “The combined product portfolio will cover all the major attack points within an organization, and our expanded services capacity will allow us to quickly pivot to incident response when necessary to reduce the impact of security breaches,” Mandia said in the statement.

A Chinese espionage group since 2006 has stolen hundreds of terabytes of information from at least 141 companies across 20 major industries, including aerospace and defense, according to a February report from Mandiant.

The Pentagon in its latest annual assessment of China’s armed forces for the first time blamed China directly for targeting its computer networks. The attacks were focused on extracting information, including sensitive defense technology.

The Pentagon’s own Defense Science Board, a panel of government and civilian scientists and experts, in a confidential section of a report last year concluded that many of the military’s most advanced weapons systems such as the F-35 fighter jet and Littoral Combat Ship have been compromised by Chinese hackers.

Peter Singer, a fellow at the Brookings Institution in Washington, D.C., says no issue has become more important but less understood than cybersecurity.

During a live chat on Twitter Friday to promote his new book, “Cybersecurity and Cyberwar,” which he co-authored with Allan Friedman, Singer said the military must use offensive as well as defensive tactics for any conflict in cyberspace, but that it’s currently disproportionately funding offensive capabilities.

Some 15 percent of all defense-related mergers and acquisitions today involve cybersecurity firms, Singer said. Cyber is a “Huge area of business growth, so industry can target beyond DoD for new clients,” he said.

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Brendan McGarry
Brendan McGarry is the managing editor of Military.com. He can be reached at brendan.mcgarry@military.com. Follow him on Twitter at @Brendan_McGarry.