Ride the Lightning

STRANGE BEDFELLOWS: GUIDANCE SOFTWARE AND ACCESS DATA

November 12, 2008

Like so many others, I’ve been watching the tango between Guidance Software (maker's of EnCase) and AccessData (maker's of FTK) with interest. AccessData, which is privately held, had offered to buy all of Guidance’s outstanding stock for $4.50 a share in early October. On October 31st, Guidance rejected the offer. For those of you who haven’t been watching Guidance’s stock price, it has been sinking like a rock, losing about 79% of its value over the last year.

AccessData’s CEO, Tim Leehealey, is formerly a Guidance executive, so yes, the plot thickens. Is this a grudge match? No love lost for his former employer? Some sort of revenge? I’ve no idea. But Leehealey is not taking Guidance’s “no” lying down, and has said he will take his offer directly to the shareholders.

While antitrust lawyers have been cited as saying the deal won’t go through because Guidance and AccessData are the top two vendors of computer forensics software, I have my doubts. If Sirius and XM were allowed to merge, I can’t see the government stopping this merger. It wouldn’t be rocket science for another well-funded company to develop competitive software, and there are other vendors already out there, though not with the capacities of Guidance and Access Data products.

Quite a business brawl shaping up here. Stay tuned.

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