M&A Watch: Evaluating Websense, Strategic Versus Financial (WBSN, LWSN, NOVL, INTC, DELL, HPQ)

Websense Inc. (NASDAQ: WBSN) finds itself in a mixed position as it reportedly is exploring its merger possibilities.  Shares originally popped up almost 10% to $22.37 when we first covered this on March 16 on reports that it was exploring a sale (or other alternatives) with the help of Frank Quattrone’s Qatalyst Partners.

Websense is a phenomenal company.  Its web, data, and email filtering technology undoubtedly saves companies endless dollars and endless technology headaches and endless wasted hours from filtering out websites, content, and data that are deemed inappropriate or which are deemed to be infiltrating that could harm a user’s computer.

What is interesting is that both Novell Inc. (NASDAQ: NOVL) and Lawson Software, Inc. (NASDAQ: LWSN) are larger and both are involved in pending mergers.  Websense is arguably the most impressive of these three companies without considering its sub-$1 billion market cap today. Though Websense seems expensive, it may be very cheap to the right buyer .  Lawson is far from cheap and Novell went almost nowhere in more than a decade, and we admit that the conservative stance may not be reflected by a true technology buyer.

The sale was initially touted as a $1 billion possibility and we would note that Websense ended 2010 with some $77.6 million in cash and with $67 million in direct long-term debt. We also cannot help but notice more than 60% of the company’s assets are classified as “goodwill and intangible assets” and Yahoo! actually classifies the net tangible assets as being -$281.86 million even if its total equity is listed as $131.66 million.

The world of data security has consolidated and it is possibly the recent McAfee acquisition by Intel Corporation (NASDAQ: INTC) which has gotten data security companies back on the M&A radar.

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