Is Checkpoint a Potential Takeover Target?

On Monday’s Barron’s online, ran a story about potential M&A prospects and none other than the Israeli security company Checkpoint (CHKP), made the list as a potential target. To readers of our blog this comes as no surprise.

Back in November we posted an article about the potential IBM (IBM) buyout of Checkpoint. At that point in time, Val Rahmani, IBM’s general manager of infrastructure management for global technology services, saw security as a key to growth. Val said, “We’re looking at a lot of different companies right now, as we always do in a number of different spaces within security.”

With the major multi-nationals cutting back on R&D spending I would doubt that IBM, for example, would try and build a system in-house, when instead, it can acquire a security play, and get a real company that has very real earnings.

Keep an eye on Checkpoint, as it may go down as Israel’s biggest acquisition ever. After all it’s not just the Israel Opportunity Investor [IOI] that thinks this is possible, but Barron’s as well.

Disclosure: The author’s fund has a position in CHKP. He holds no position in any other stock mentioned as of March 18, 2008.

Comments

[Yazz]

Do you think CEO Shwed is open to a sale?

[nyka]

Thanks. I'll be faxing my broker tomorrow morning and advising him to sell my 100 shares of Bear Sterns, and to use the proceeds to buy Checkpoint.

[DR JOHN AINSWORTH PE]

GIL SHWED HAS BEEN ASKED ABOUT SELLING HIS COMPANY IN THE PAST. HE HAS REPLIED THAT THE COMPANY IS NOT FOR SALE. HE IS INTERESTED IN ACQUIRING OTHERS TO BUILD HIS FOOTPRINT IN THE SECURITY ARENA. SO ALL YOU TAKEOVER GURUS, GET A LIFE AND DO NOT LOOK AT (CHKP) FOR YOU SALVATION.

[VPNDude]

The "Gil factor" is a major problem here. Many of Gil's close associates have left Check Point because they burned out on his close control of the company.

But Gil as done some things that he stubbornly said he wasn't going to do, like sell hardware. So there is a point, out there somewhere, where Gil can be persuaded to do something like sell.

If you go by the "GSM" or Gil stubborness meter, it can help you gauge if this is the right time for him (not Check Point) to sell. He's typically about 1 year off on internal product changes, and 3 years off on things like major market shifts. Check Point should have been sold three years ago, so it might be time for him to move.

[taco_man1]

The major players in CHKP are still young(ish). Expect them to hold onto it for another few years (3-10) before they start really shopping it around. Location will hurt the final price. Middle-east isn't exacally a bastion of stability, and political news and short-term climate may well affect price, and timing of a future sale.

That said, I intend to maintain my small stake in CHKP.