Dell Secures SonicWALL in New Acquisition

UPDATE: Dell's acquisition of SonicWALL rumored at $1.2 billion.

Not one to shy away from big-time competitors such as Apple Inc. (NASDAQ: AAPL) or Hewlett-Packard Company (NYSE: HPQ), Dell Inc. (NASDAQ: DELL) has just acquired another leg up on the competition – except this time, it's in less familiar territory.

Dell announced today that it will acquire privately-held SonicWALL Inc., a company that is known for providing network security devices and software to companies in order protect digital communications between headquarters and branch offices, secure broadband Internet access and filter content.

While details are being kept under wraps at the moment, FBN Securities said the deal could cost Dell around $1 billion.

“The deal is expected to be accretive to DELL's NG EPS in FH2 2013 (ending Jan. 2013) and is expected to close in early FQ2 2013 (July 2012 quarter). This expands DELL's security offerings (remember that DELL acquired SecureWorks in early 2011 for the latter's security-as-a-service offering; it also acquired KACE for [vulnerability and patch management] in 2010),” FBN Securities said in a research report this morning.

As a Unified Threat Management (UTM) security provider, SonicWALL offers four key firewall products: 1) SuperMassive (high-end), 2) E-Class NSA, 3) NSA and 4) TZ.

SonicWALL has long since been affiliated with Dell, as it has brought over 300,000 customers to the company over the years. According to Bloomberg, the need for transition has been a long-time coming for the computer company.

“We are building a strategic software portfolio to address the needs of our customers,” John Swainson, president of Dell's software group, said in a statement. “Our customers see security as a key IT concern for the foreseeable future.”

As for the investment firm that is selling SonicWALL to Dell, Thoma Bravo LLC will become better capitalized after the SonicWALL deal pulls through, upping the chances that the firm will make a bid for Brocade Communications Systems Inc. (NASDAQ: BRCD), according to FBN Securities.

The acquisition has been looked upon favorably in the investor world, as Jefferies commented in a research report that Dell has calculated quite the strategic impact through this merger, regardless of time playing a role.

“We believe Dell will be able to leverage its distribution and customer relationships to sell more SonicWall product. We think this adds more tools to Dell's cloud stack but that a more unified offering is unlikely before CY13,” Jefferies commented, maintaining its Hold rating and $17 PT on the company.

Dell, known as the third largest computer retailer in the world, will now be known as the one to watch in the software security industry as well.

Dell Inc. is currently trading at $17.10, up +2.45% YTD.