Cisco Beefs Up Security, Buys Lancope For $453M

As HP downsizes its own holdings in network security, another IT giant is ramping up: today Cisco announced that it would acquire Lancope, which focuses on behavior analytics, threat visibility and security intelligence to detect malicious activity on corporate networks. Cisco is paying $452.5 million in a cash and equity deal, with the Lancope team becoming part of the Cisco Security Business Group.

It’s a very big return for Alpharetta, GA-based Lancope’s investors: the company had raised only $24.6 million since opening for business in 2000. Investors include Canaan Partners, GMG Capital, HIG Partners and Council Ventures.

The problem that Lancope solves is this: As the world becomes ever more connected and businesses are using an increasing number of devices and apps to access corporate networks — some of which are coming in by “back-door” routes unapproved by a company’s IT department — the risks for data breaches grow.

This has translated into big business for Lancope: the company uses systems it calls “NetFlow” and “StealthWatch” to essentially track all activity in networks in real time to look for any erratic activity. It claims to cover some 45 million hosts among its customers, which include both Cisco and HP as well as the State of Connecticut, the publisher Gannett, and the Stanford School of Medicine, among others that it does not name (for security reasons).

As well as using its services as a customer, Cisco had already been working with Lancope, according to Rob Salvagno, VP of Cisco’s corporate development. It will be adding the services to its portfolio of enterprise solutions, where it will sit alongside a number of other security products. Other recent acquisitions that Cisco has made to fill out that portfolio include OpenDNSPortcullis, and Neohapsis.

“As enterprises digitize, security challenges rapidly evolve. Real time visibility and understanding of the behavior of every machine or device on the network becomes critical in adapting the ability of enterprises to identify and respond to the next wave of cyber threats,” Salvagno said in a statement. “Cisco is committed to helping organizations defend their networks and devices. Together with Lancope, our combined solutions can help turn a customer’s entire network into a security sensor.”

The deal is expected to close in Q2 2016.