Security vendor Blue Coat Systems acquired Permeo Technologies for $60.8 million on Tuesday to extend its infrastructure protection to end points for mobile users.

The acquisition price includes $13.4 million in cash and approximately $47.4 million in Blue Coat common stock, based on its closing price of $45.72 per share last Friday. The price does not include transaction costs or unvested stock options. The transaction is expected to close in about 60 days.

Blue Coat, based in Sunnyvale, California, plans to integrate Permeo’s end-point access security technology into its ProxySG product line.

The technology will allow companies to control security and encrypt data down to the desktop level, including the cache, without requiring special software to be installed on the desktop.

“The enterprise workforce is increasingly more mobile and outside of the traditional corporate network but still requires the same level of protection and control,” said Blue Coat CEO Brian NeSmith.

“The technology from Permeo helps us to extend our proxy infrastructure for applications and security services all the way to the end point of the virtual enterprise,” he added.

He hopes to have the Permeo technology integrated in about nine months. Blue Coat expects the acquisition to bring in approximately $3.5 million to $4 million per quarter in revenue in about four to six quarters.

The company also anticipates the impact on earnings per share will be about $0.08 after Permeo is fully integrated in the first quarter, with an estimated impact of $0.10 in the fourth fiscal quarter.

Shares of Blue Coat fell $4.23 to $41.49 in recent trading.

Retention Plans

Permeo is currently generating about $800,000 to $1 million per quarter in revenue. The company has approximately 50 employees, about half of which are involved in research and development.

Mr. NeSmith said his company has put in place retention plans for some key employees, but expects to spend the bulk of the one-time restructuring charges on severance. However, he added that those restructuring charges would be minimal.

The company still plans to use Permeo’s base in Austin, Texas, as an R&D center.

“Combining our on-demand delivery technology for application and security services with Blue Coat’s market-leading proxy infrastructure solutions will give customers a whole new level of end-to-end secure content and application delivery,” said Permeo CEO Michael S. Bennett.

His privately held company has received funding from Austin Ventures, Sierra Ventures, and NEC America.

However, the Blue Coat-Permeo combination will face competition from other network security vendors such as Juniper Networks, Check Point Software Technologies, Cisco Systems, Aventail, and Symantec.

Mr. NeSmith sees his company’s technology as part of an overall enterprise security system and not necessarily competing with Symantec and some other vendors. He also sees the deal as an essential way for his company to extend enterprise security to users of mobile computers and remote desktops.

“What we lack today strategically is an ability to deal with mobile users in the enterprise environment as well as figure out how to make sure those end points are appropriately secure,” he said. The technology will be able to work now at the desktop end point, as well as the gateway and branch level.

Strengthening Remote Access

The acquisition “should strengthen the company’s play on remote application access,” wrote Horacio Zambrano, an analyst with Wedbush Morgan Securities, in a research note.

Permeo, he added, “will in our view extend BCSI’s security capabilities beyond the gateway and bolster its offering for edge access of enterprise applications, a key strategy for penetrating deeper into its 4,000 accounts with its smallest appliance, the ProxySG 200.”

He also noted that Permeo’s technology could improve Blue Coat’s capabilities at the gateway by adding information theft security capabilities for remote access.