Analysts: FireEye Inc. Buyout Rumor Is Plausible

The rumor that FireEye Inc. FEYE could become a takeover target sounds plausible in a market ripe for consolidation, several analysts told Benzinga Tuesday.

The Milpitas, California-based computer security company, with a market capitalization of $4.61 billion has received buyout overtures from Oracle Corp. ORCL and International Business Machines Corp. IBM, according to the rumor website DealReporter, which didn't offer further details nor sources.

FireEye shot up briefly on the rumor Monday, but was nearly unchanged recently at $30.39 a share.

Analysts had no information on the sketchy report, but were mostly unwilling to discount the possibility of a buyout.

"We're going into a massive potential phase of consolidation" in the computer security sector," FBR's Daniel Ives told Benzinga.

Traditional technology companies like IBM and Oracle, “need more fuel in the engine” to accelerate growth, Ives said.

"FireEye is certainly of interest to any of the major technology providers,” JMP Securities analyst Erik Suppiger told Benzinga. "I don't know that I would rule out them considering strategic alternatives."

IBM declined comment to Benzinga while efforts to reach FireEye and Oracle weren't immediately successful.

Morningstar's Peter Wahlstrom said an acquisition of FireEye could help the far larger IBM in efforts to expand offerings in big data analytics and computer security.

“What I think is interesting is that IBM is four times as large as FireEye in terms of security revenue,” Walstrom said.

But Summit's Richard Williams is skeptical that FireEye would be motivated to sell itself at all.

"Why would you give up a pure play with a huge technology lead in a marketplace that's crying out for security?” WIlliams asked.